Meta Shares Fall Despite Strong Revenue As Legal Costs Hit Quarterly Profit
Meta reported strong quarterly revenue but weaker profits as rising legal expenses and restructuring costs weighed heavily on overall earnings performance.
The company generated $60.8 billion in revenue during the second quarter, an increase of 28 per cent compared with the same period last year and above Wall Street expectations. However, quarterly net profit fell 14 per cent to $15.85 billion, or $6.18 per share, from $18.34 billion, or $7.14 per share, a year earlier.
The decline in earnings was largely attributed to $2.4 billion in legal expenses together with $1.18 billion in severance costs linked to workforce restructuring. These charges offset strong growth in Meta's advertising business and artificial intelligence products.
Investors reacted cautiously to the results, sending Meta shares lower in after hours trading. Although revenue exceeded forecasts, analysts expressed concern over rising operating costs and the company's continued heavy investment in artificial intelligence infrastructure.
Chief Executive Mark Zuckerberg said artificial intelligence remains central to Meta's long term strategy, highlighting continued growth across Facebook, Instagram, WhatsApp, and Threads. The company reported that its family of apps now reaches approximately 3.6 billion daily active users worldwide.
Meta also confirmed higher spending plans for the remainder of the year as it continues expanding data centres, developing AI models, and investing in advanced computing infrastructure. Company executives believe these investments will strengthen future growth despite reducing short term profitability.
Looking ahead, Meta forecast third quarter revenue of between $61 billion and $64 billion, while increasing its projected annual expenses. The guidance suggests the company expects continued business growth but acknowledges that operating costs will remain elevated.
Despite the weaker profit performance, analysts noted that Meta's core advertising business continues to perform strongly and user engagement remains at record levels. Investors will now focus on whether the company's substantial AI investments generate stronger financial returns over the coming quarters.
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