Mark Zuckerberg will spend a lot of money. On AI. And on the metaverse. And on other things which’ll take years to generate material revenue for Meta. In the here and now, the company will grow the top-line 18% in the current quarter, slightly slower than Wall Street expected. Oh, and expenses are drifting up.

That was the overarching message from Meta’s Q1 report and subsequent conference call. It was contrasted by the market with what investors heard last quarter.

Not that Meta didn’t convey the same intention to plow money into futuristic initiatives three months ago. They did. This is Meta after all, a company which renamed itself in honor of a virtual world that doesn’t even exist yet. But the expected outlays are larger now, and more to the point, last quarter was a celebration of higher-than-expected revenue today and, just as important, big payouts to investors, both through more buybacks and a first-ever dividend.

That juxtaposition — between higher costs and spending on an expedition to find the pot of gold at rainbow’s end and higher revenue today with an emphasis on returning cash to shareholders — appeared stark to investors. Concerns were likely amplified by the perception that Zuckerberg, having engineered a truly monumental rally in the stock off the October 2022 lows, feels like he has some leeway to chase dreams again.

There’s nothing wrong with that. You want a visionary CEO. Indeed, a lot of what ails America can be traced to myopia in the C-suite — the so-called “tyranny of the next earnings report” is the bane of our economic existence in too many ways to expeditiously enumerate. In addition, AI isn’t the metaverse. Zuckerberg surely thinks the two are complimentary and in some ways synonymous, but the point is that Meta would be derelict not to spend gratuitously on AI.

So, Zuckerberg isn’t “wrong,” exactly. The problem is that the memory of what some critics still view as a botched corporate makeover is still fresh in the minds of investors, and nobody wants a repeat of that. Simply (and colloquially) put, if Mark sees a rainbow, he’s demonstrated a penchant for following the little leprechaun beckoning him towards the green, rolling hills. Some worry those merry jaunts distract Meta from a core ad business which is apparently doing quite well.

Below, find the exchange from Meta’s call which unnerved investors and catalyzed another leg lower for Meta’s stock after hours late Wednesday, on top of the meaningful losses it already incurred following the earnings release. The analyst, Eric Sheridan, is from Goldman.

Eric Sheridan: Thank you so much for taking the questions. Maybe I’ll ask a two-parter. Mark, you use the analogy of other investment cycles you’ve been through around products like stories and reels. I know you’re not giving long-term guidance today, but using those analogies, how should investors think about the length and depth of this investment cycle with respect to either AI and/or Reality Labs more broadly and mixed reality? And you both talked about the impact AI is having on the advertising ecosystem. What are you watching for in terms of adoption or utility on the consumer side to know that AI adoption is tracking along with the investment cycle? Thank you.

Zuckerberg: Yeah. In terms of the timing, I think it’s somewhat difficult to extrapolate from previous cycles, but I guess like the main thing that we see is that we will usually take, I don’t know, a couple of years. It could be a little more, could be less to focus on building out and scaling the products, and we typically don’t focus that much on monetization of the new areas until they reach significant scale, because it’s so much higher leverage for us just to improve monetization on other things before these new products are at scale. So you enter this period where I think kind of smart investors see that the product is scaling and that there’s a clear monetizable opportunity there even before the revenue materializes. And I think we’ve seen that with reels and with stories and with the shift to mobile and all these things where basically we build out the inventory first for a period of time and then we monetize it. And during that time when it’s scaling, sometimes it’s not just the case that we’re not making money from that thing. It can often actually be the case that it displaces other revenue from other things. So like you saw with reels, it scaled and there was a period where it was not profitable for us as it was scaling before it became profitable. So I think that that’s more the analogy that I’m making on this, but I think what that suggests is that we should all be focused on for the next period is as the consumer products scale, Meta AI really just launched in a meaningful way. So we don’t have any kind of hard stats to share on that, but I’d say that’s the main thing that I’m focused on for this year and probably a lot of next year is growing that product and the other AI products and the engagement around them. And I think we should all have quite a bit of confidence that if those are on a good track to scale then they’re going to end up being very large businesses. So that’s the main point that I was trying to make there.

I should emphasize: He’s Mark Zuckerberg and the rest of us aren’t. We can criticize and we can jeer and we can accuse him of all sorts of things (in many cases credibly), but at the end of the day, who the f–k are we, right? In that context, I don’t doubt him. Really I don’t.

With that caveat, he must’ve known — particularly if he checked the stock price before the call — that being so explicit about the “long and variable lags” (if you’ll pardon the joke) between spending to scale these projects and meaningful revenue would undercut market sentiment further.

Although the shares were off the lows into the US afternoon, Meta would’ve suffered a ~$190 billion value destruction event on Thursday had pre-market losses held, just short of the company’s infamous quarter-trillion dollar wipeout two years ago.

By the close, the market cap loss was around $130 billion. Remember: It was just three months ago when Meta scored the second-largest one-session value gain in US market history.

What can you say? “HODL!”