Meta Platforms is increasing its spending, which is not helping its stock price but is giving a good boost to other companies.
Key Details
- Shares of Meta dipped 23% as the company had a poor third-quarter earnings report.
- The big drop in shares was a disappointment for many, but a few companies actually benefited from Meta’s loss.
- Meta says it plans to increase spending on data-center and network infrastructure giving a boost to some stocks in the related fields.
Why it’s news
Meta didn’t have a good third-quarter earnings report sending shares plummeting to its lowest point since 2016.
The parent company of Facebook reported quarterly revenue of $27.7 billion Wednesday, a decline of more than 4% year over year and its second straight quarterly decline making the company’s profit plummet 52% to $4.4 billion, according to CNBC writer Sofia Pitt.
Meta might be having a hard time from this downfall, but others are benefiting. The company said it plans to increase spending on data-center and network infrastructure in turn giving a boost to some stocks in the related fields.
Meta is a top customer of networking hardware provider Arista Networks. After the spending announcement it caused Arista stocks to jump 11% on Thursday morning.
Other companies that had a boost from the increased spending were Nvidia that went up 5%, Marvell technology went up 7% and Advanced Micro Devices went up around 3%.
Meta said in its third-quarter earnings that it expects capital spending in 2022 of $32-$33 billion and in 2023 it expects that to rise to $34-$39 billion, according to Barron’s writer Adam Clark.
