Recent reports show that Mark Zuckerberg’s net worth plummets as Meta’s stocks dwindle by around 19 percent, wiping out more than $200 billion in market value.
Meta’s shares dropped by 15 percent in pre-market trading on Thursday.
Moreover, higher expenses were forecast with the massive shift from the core digital advertising business to investing in building artificial intelligence infrastructure and the metaverse.
Revenue continues to drop as the company’s expenses forecast skyrocketed by $5 billion to $40 billion on items required in building his AI model.
Meta also announced that an additional $5 billion will be invested in AI projects.
Zuckerberg acknowledged that Meta’s stock price remains volatile at this phase of their AI plans. Meanwhile, the billionaire predicts that this move will benefit the company long-term, citing his previous efforts in reels, stories, and the transition to mobile.
The Meta CEO emphasized that their focus is to build a “leading AI,” discussing Meta Llama 3, their newest large language model, and the launch of Meta AI, which will compete with Open AI’s ChatGPT.
But the reality reflects otherwise: Meta’s Reality Labs department continues to incur expenses rather than generate revenue. The department only created $440 million worth of sales in the first quarter, while its losses hit $3.85 billion, and its total cumulative losses since 2020 reached $45 billion.
“I think it’s worth calling that out—that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook where we’re investing in scaling a new product but aren’t yet monetizing it,” Zuckerberg said.
With this shift in focus, the billionaire CEO emphasized that “there are several ways to build a massive business here, including scaling business messaging and introducing ads or paid content into AI interactions.”
Meta’s finance chief, Susan Li, echoed Zuckerberg’s statement and believes that before it can generate profit, Meta has to develop advanced models and scale products.
“While there is tremendous long-term potential, we’re just much earlier on the return curve,” Li pointed out.
Meanwhile, Zuckerberg appealed to investors and told them that they would well be rewarded if they took the risk.
“Historically, investing to build these new scaled experiences in our apps has been a very good long-term investment for us and for investors who stuck with us, and the initial signs are quite positive here too,” Zuckerberg said.
“But building a leading AI will also be a larger undertaking than the other experiences we’ve added to our apps, and this is likely going to take several years.”
