Meta raises capital expenditure outlook amid investor concerns

In the United States, Meta Platforms reported its third-quarter financial results at the end of October 2023. The company surpassed analyst estimates with a 19% increase in revenue and a 5% rise in daily active users. However, despite this positive performance, investor sentiment remained negative due to heightened spending concerns. The company announced a $1 billion increase in its full-year 2024 capital expenditures outlook, indicating a focus on significant investments in technology and infrastructure. Moreover, Meta’s Reality Labs division is still expected to incur substantial operating losses that may increase meaningfully year-over-year. Compounding the situation, several company insiders, including CEO Mark Zuckerberg, CFO Susan Li, and COO Javier Olivan, sold shares of Meta in November 2023 as part of their trading plans. This insider selling could signal a lack of confidence among the leadership regarding the company’s current stock performance. On a more positive note, the social media platform Threads, a part of Meta's offerings, gained traction, adding 35 million new users within a short period, suggesting a resurgence in user interest amid concerns regarding competing platforms. Interestingly, Threads has been experiencing sustained growth, reportedly gaining more than a million daily sign-ups for three consecutive months as of November 2023. This growth in user engagement could potentially stabilize Meta’s market position, as the platform had over 275 million monthly active users according to Zuckerberg during the earnings call. Further developments include features being tested to enhance user experience on Threads by allowing individuals to customize their feed, which could further drive engagement. Despite these positive user metrics, Meta is facing legal challenges, with a trial scheduled for April 2024. The U.S. Federal Trade Commission has accused Meta of acquiring Instagram and WhatsApp to suppress competition. Judge James Boasberg has rejected the company's attempts to dismiss these accusations, indicating a potentially rocky legal battle ahead for Meta in the coming months. Overall, while there are signs of user growth and innovation within Meta, the company is navigating a complex landscape of investor concerns, insider selling, significant capital expenditure increases, and impending legal challenges.