We have crossed the best time to know about and prepare for such large transformations. This is how Dalio sums up the scene. For him, the time has come when leaders and investors should turn away from reacting to emotional headlines on a day-to-day basis and should rather concern themselves with the broad changes taking place.
In his view, the next crisis will not be possible, but probable. And this time, we have a warning.
Spending ramps up for possible growth
Meta slightly raised its full-year capital expenditure (capex) outlook estimate of expenditures for the full year, now looking between $64 billion and $72 billion, as opposed to the initial range of $60 billion with an upper end of $65 billion. Increased spending reflects Meta’s commitment, especially in AI and infrastructure, and metaverse longer-term dreams, even while Reality Labs is taking a loss, with losses reported in Q1 of $4.21 billion.
Whatever losses Reality Labs may be facing do not seem to dissuade Meta from pursuing next-generation computing and immersive digital experiences.
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Analyst-exposure risks
Some analysts are still concerned about this point. Jefferies analyst Brent Thill notes that unlike other tech giants, Meta doesn’t have a cloud services segment and hence, is dependent on advertising. This makes it all the more vulnerable. On this point, according to Thill, Meta has about 10% ad revenue exposure to advertisers based in China. Many of those, he said, have curtailed spending.
Yet with solid Q1 numbers paired with a robust forecast for $Q2, analysts believe Meta is managing those headwinds quite successfully for now.
Regulatory battles go on
Meta’s earning reports are at the time when the company is engaged in a legal battle with the Federal Trade Commission (FTC), which accuses the company of an illegal monopoly on social networking. In its complaint, the FTC seeks to compel divestiture of Instagram and WhatsApp on the basis that the acquisitions were part of a “buy-or-bury” strategy.
Reported settlement talks between Meta CEO Mark Zuckerberg and the FTC have fallen through. Although Zuckerberg was said to offer up to $1 billion, the FTC was reported as wanting no lower than $18 billion.
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Political ties and legal troubles
The Wall Street Journal now reported that Meta has paid $25 million to settle a lawsuit with the former President because of the company banning him after the Capitol terrorist attack on January 6. At the same time, Zuckerberg has made efforts to strengthen ties with Trump, attending his inauguration and contributing $1 million to the event’s fund.
However, given the political environment and legal troubles, Meta’s financial result shows that it is one of the most resilient players within the technology sector.
