Meta promo code searches have spiked this week, but anyone typing that phrase into Google right now is almost certainly looking for something unrelated to…
Meta promo code searches have spiked this week, but anyone typing that phrase into Google right now is almost certainly looking for something unrelated to the company's stock slide after its second quarter earnings report.There is no advertising or shopping discount tied to Meta's earnings news. The confusion appears to stem from unrelated coupon or gaming promo code searches colliding with a trending company name. What actually happened this week has nothing to do with codes or discounts: Meta shares fell as much as 10% in after hours trading before settling down about 7%, after the company reported costs that ballooned 55% even as revenue rose 28% year over year.
Why Meta's Earnings Spooked Investors
Meta's Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, still grew revenue, but operating income for that unit slipped to $23.4 billion from $25.0 billion a year earlier. Company wide operating income fell 8% and net income dropped 14%. Free cash flow came in at just $784 million, a steep drop from the roughly $12 billion Meta had averaged over the previous eight quarters and uncomfortably close to negative territory.
The culprit is capital spending. Meta spent $31.1 billion on capital expenditures in the quarter, nearly double what it spent a year earlier, largely on data centers, servers, networking gear and chips to support artificial intelligence. Operating cash flow was $31.9 billion, meaning the company plowed almost every dollar its business generated straight back into AI infrastructure. Depreciation and amortization jumped 46% year over year to $6.4 billion as equipment gets replaced faster than it used to.
The Cloud Question Zuckerberg Would Not Fully Answer
Microsoft, Amazon and Google have offset similar spending by renting out infrastructure through large cloud businesses, generating revenue almost immediately. Microsoft's stock actually rose nearly 2% after its own report Wednesday on cloud growth, a contrast that analysts pressed Meta CEO Mark Zuckerberg on directly.
Zuckerberg confirmed Meta is planning to enter the cloud computing business and promised details soon, saying the company is already fielding offers