Facebook (META) Stock Price Fell 3.9% Despite Upbeat Q3 Profits

The Meta Platforms Inc (NASDAQ: META) stock price fell 3.85% premarket following its Q3 2023 earnings results, which were much better than expected. The social media company generated revenues worth $34.15 billion, surpassing the expected $33.56 billion, marking a 23% year-over-year growth.

The impressive performance resulted in a significant boost in share prices during after-hours trading. Meta's resurgence in investor confidence comes after several years of restructuring its business model to expand beyond its core social media products. Despite these efforts, advertising remains the company's primary revenue driver.

Zuckerberg highlighted that overall time spent on Facebook increased by 7%, while time spent on Instagram grew by 6% due to improved content recommendations driven by algorithmic enhancements.

Meta's short-form video platform, Reels, played a pivotal role in increasing engagement on Instagram, contributing to a 40% surge in time spent on the platform since its launch.

Additionally, Zuckerberg anticipates that interactions with businesses, likely facilitated by artificial intelligence (AI), will be the next significant pillar of Meta's business.

Like many other tech companies, Meta has shifted its focus toward artificial intelligence, emphasising AI tools in recent earnings reports. The positive results of this strategic pivot have earned Meta praise from analysts. 

This report marks Meta's most profitable quarter in years, building upon two consecutive quarters of better-than-expected results. However, it arrives in the wake of a massive lawsuit filed by attorneys general from 41 states, alleging that Meta's social media platforms harm the mental health of young users.

The social media giant has been grappling with challenges in its core advertising business, exacerbated by a broader economic downturn and users migrating to platforms like TikTok. 

Meta has been actively investing in the metaverse, its virtual reality venture, despite significant financial losses incurred by Reality Labs, the division responsible for VR products. Despite these losses, Zuckerberg reaffirmed Meta's long-term commitment to the metaverse, emphasising that it remains a significant focus for the company.

In the previous quarter, Meta launched the Quest 3, the latest model of its virtual reality headset, which received positive early reviews. The company also introduced new products, including its Ray-Ban smart glasses and an AI studio that enables businesses to customise chatbots.

Facebook (META) stock price. 

The Facebook (META) stock price fell 3.85% to trade at $288.01 from Wednesday’s closing price of $299.53.