Should Investors Buy the Meta Platforms Dip?
Meta Platforms (NASDAQ: META) reported better-than-anticipated third-quarter earnings, but you wouldn’t know it from the drop in stock price. Shares of Meta fell more than 7% Thursday and have decreased nearly 10% over the past week. Should investors buy the dip? Let’s have a look.
Meta’s business is picking up steam, with revenue growing 26% year over year to $64.6 billion. This soundly beat Wall Street’s estimates. The problem is that Meta’s spending is making investors nervous. Mark Zuckerberg’s social media company saw its free cash flow swing to a negative $2.1 billion. This is the first negative free cash flow number since the company went public in 2012.
Furthermore, spending on AI infrastructure exploded 80% to nearly $35 billion. Management now expects capital expenditures to be between $135 billion and $145 billion for the full year, up from its previous guidance of $130 billion. Lastly, Meta plans to offer a new class of nonvoting shares to help finance this growth. This means dilution for current investors is very much on the table.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.