Meta announces impressive financial report, focusing on AI and Metaverse, stock price has doubled this year.

The social media giant Meta announced its second-quarter financial results yesterday, showing an 11% revenue growth compared to the same period last year. The company also revealed that its new short video feature, Reels, has been successful in attracting the attention of advertisers, leading to a nearly 7% jump in stock price after hours trading. The stock has surged 1.5 times year-to-date.

Meta Releases Strong Financial Report

During the earnings call, Meta CEO Mark Zuckerberg highlighted a strong quarter for Meta, with continued strong growth in apps including Llama 2, Threads, Reels, as well as new AI products in development and the upcoming launch of Quest 3 this fall.

Meta's second-quarter revenue grew by 11% year-over-year to $7.788 billion, with a 16% increase in net profit to $7.788 billion, surpassing Wall Street's expected earnings per share (EPS) of $2.91 with an adjusted EPS of $2.98.

Continued Losses in the Metaverse Division

Meta's money-burning Reality Labs division underperformed, with revenue of $276 million, primarily due to declining sales of the Quest 2 virtual reality (VR) headset. The division reported a loss of $3.739 billion, slightly lower than the previous quarter's $3.992 billion. Despite this, the company plans to continue developing mixed reality products, with an expected increase in operating losses for the year and potentially larger deficits next year.

Meta's Focus Shifts to AI in the Near Future

During the earnings call, Meta CEO Mark Zuckerberg stated:

He also mentioned that their AI model Llama is being used to build many products that will help users "create worlds and embody and inhabit objects within them."

Meta recently introduced the AI large language model, Llama 2, and partnered with Microsoft to open-source the software on Microsoft's Azure cloud platform, allowing more businesses, startups, and researchers to use it for free.

Meta Stock Price Surges 1.5 Times This Year

Meta's stock price has surged 1.5 times this year, outperforming the S&P 500 index's 19% increase, indicating the company's gradual recovery from the setbacks of 2022 and benefiting from the AI trend and cost-cutting measures from last year's significant layoffs.

Following the earnings report, the stock price surged nearly 7% in after-hours trading, reaching a year-and-a-half high of $319.