Meta loses $200 billion in value in hours after Facebook-owner warns it will invest more than expected in AI – with expenses for 2024 as high as $40 billion

Meta shares plunged as much as 19 percent on Wednesday after Mark Zuckerberg admitted the company would lose tens of billions of dollars on his pet projects.

More than $200 billion was wiped from the company after he said the move into AI and the metaverse would burn as much as $40 billion in cash by 2024.

The metaverse is Zuckerberg’s much-derided virtual reality world that exists online and is viewed through the company’s headsets and glasses. It’s not a hit with consumers or businesses.

He spoke to analysts and investors after the Facebook owner announced its profits for the first three months of the year.

Profits rose, but higher-than-expected spending and warnings that advertising would make less money than expected in the second quarter from April to June caused the sell-off.

Shares of Meta are up 116 percent in the last twelve months and up more than 45 percent year to date. That had catapulted boss Mark Zuckerberg to number three on the Bloomberg rich list.

Before the earnings results, shares were at $493, ​​but fell to $407 after hours – with investors worried about signs that spending was on the rise again.

That affected Zuckerberg’s wealth, which stood at $166 billion before the earnings report. More than $20 billion is believed to have fallen.

The social media company posted a turnover of £29.2bn in the three months to the end of March, up 27 per cent on the previous year.

This is the fastest growth rate since the third quarter of 2021 for Meta, which owns Instagram and WhatsApp in addition to Facebook. Profits have more than doubled to £10 billion from £4.6 billion the year before.

“We estimate that more than 3.2 billion people use at least one of our apps every day and we see healthy growth in the US,” Zuckerberg told analysts on the investor call.

But due to investments in AI and the Metaverse, the company expects full-year 2024 capital expenditures to be between $35 billion and $40 billion. compared to the previous forecast of $30 billion to $37 billion.

It also raised its total spending estimate to $99 billion from $94 billion.

Zuckerberg urged investors to be patient as his company transitions into AI, acknowledging that rolling out new products before they make money has “historically seen a lot of volatility in our stock.”

“Building industry-leading AI will… be a bigger undertaking than the other experiences we’ve added to our apps and will likely take several years,” he added.

Last week, Zuckerberg unveiled the latest version of Meta AI, which is now deployed as an enhanced smart assistant in his apps including Instagram, WhatsApp, Messenger and Facebook.

Meta’s latest technology is being rolled out in more than a dozen English-speaking countries, including Australia, Canada, Singapore and the United States.

The AI ​​is powered by LLaMA 3, the company’s most powerful major language model, which the company makes available as an open source product to developers to create their own tools.

The tech giants are locked in a race to become the AI ​​leader, with Microsoft seen as the frontrunner thanks to its partnership with ChatGPT maker OpenAI.

The news comes as Zuckerberg, 39, undergoes a midlife makeover.

Mark Zuckerberg has revamped his clothes, wearing gold chains and fur coats as he strays from his standard T-shirt

Mark Zuckerberg (center) trained with UFC champions Israel Adesanya (left) and Alex Volkanovski (right)

Known for his skinny, pale, sandal-wearing appearance, Zuckerberg is now reinventing himself with fur coats, diamond chains and a ripped body.

Zuckerberg peaked Thursday when he posted a video showing off Meta’s AI technology, sporting a scruffy, bearded look.

The public responded overwhelmingly to Zuckerberg’s AI-generated look, with one person saying:[He] went from Mr. Steals Your Data to Mr. Steals Your Girl.’