Meta’s spending habits have strange power to shock

Metaverse 2.0. Mark Zuckerberg’s backers seem to have forgotten who he is. Meta Platforms, the company he started under the banner of moving fast and breaking things, lost 16%, or some $200 billion of market value, after indicating its second-quarter revenue would be lower than analysts were projecting and that this year’s capital-expenditure bill would be higher than previously flagged. Maybe the inaugural dividend unveiled in February lulled investors into complacency, but the CEO’s track record leaves little doubt about how he operates.

Following the release of the quarterly results on Wednesday, Zuckerberg made clear where he is steering the owner of Facebook, Instagram and WhatsApp. He’s more optimistic and more ambitious on artificial intelligence and wants to build the world’s leading services in the field. The goal will require significant investment. Meta’s 2024 forecast for capex, including on servers and other infrastructure, could reach $40 billion, more than the $37 billion it had signaled earlier. Zuckerberg and Chief Financial Officer Susan Li also noted the related projects probably will take “several years.” Finding ways to make money from them also is a work in progress.

If this sounds familiar, it is. Meta has been spending heaps of money to reinvent itself for years. It made the leap from PCs to smartphones, and keeps rolling out new services and features, including Reels and Stories, before diving whole hog into the metaverse. AI is already recommending half of what shows up on Instagram feeds. And although the upside of applying the technology to the company’s primary revenue source, advertising, may be fuzzy, it’s also quite promising.

Meta’s past sprees have sent investors scurrying before. In 2022, for example, right after Facebook rebranded itself as Meta, capex jumped to 27% of revenue, more than 10 percentage points higher than in the previous year. The company’s stock price plummeted by nearly two-thirds before recovering, and then some.

With deep-pocketed rivals such as Alphabet, Amazon.com and Microsoft all gunning for AI supremacy, it’s hard to see how anyone would think Zuckerberg might enter the race at half-speed. As ever, he’ll be running full throttle, knocking things over along the way. There’s little reason for his spending habits to have any more power to shock.