Meta shares fall on weak earnings forecast

Meta shares tumbled 12% Thursday morning after the company posted weak revenue guidance that overshadowed its first-quarter profit. Shares were trading at about $430 at 11 a.m. ET, erasing roughly $161 billion in market capitalization from the $493.5 closing price before Wednesday’s earnings.

The company reported $4.71 earnings per share on $36.46 billion in revenue for the quarter, beating the consensus estimate of $4.32 per share and $36.16 billion in sales, according to LSEG.

The stock selloff gained momentum in extended trading on Wednesday after CEO Mark Zuckerberg discussed spending in areas such as artificial intelligence and mixed reality that are not currently profitable.

Meta expects second-quarter revenue of $36.5 billion to $39 billion. The midpoint of the range, $37.75 billion, was below the average analyst estimate of $38.3 billion.

Analysts at JPMorgan reiterated their overweight rating on Meta, while cutting their price target to $480 from $535, citing the company’s increasingly heavy AI investments that they believe may eventually pay off.

“Meta’s virtual ownership of the social graph, strong competitive moat and focus on user experience position it to become a sustainable blue-chip company built for the long term,” they wrote in a Thursday note.

Analysts at Bernstein, maintaining an outperform rating on Meta’s stock, cut their price target to $565 from $590 and described the company’s current business strategy as an “expensive offensive” with a longer payoff.

“We understand the uncertainty, but Meta deserves to retain elevated value here,” they wrote in a note on Wednesday. “Without sounding too religious, you either believe in Zuck or you don’t, and we do.

Analysts at Barclays maintained an overweight rating on shares of Meta and cut their price target to $520 from $550 in a note to investors on Wednesday. They reaffirmed their belief in the “name over the long term,” despite what they expect to be a “bumpy ride through late 2024 as revenue growth rates slow quite a bit from here.”

“If there’s one thing META has proven over the years, it’s that it’s exceptionally good at performing during major technology platform shifts, perhaps the best,” Barclays analysts wrote. “We haven’t heard anything from Zuckerberg that is of great concern.

— CNBC’s Michael Bloom contributed to this report.