The stock of Meta, Facebook’s parent company, recorded an “abnormal landing” on Thursday, recording a “dip” of more than 25% – which “erased” more than $ 250 billion from its market value, marking the worst meeting in the history of the company- after the disappointing quarterly financial report that showed a decrease in users and an increase in expenses related to its transition to the “metaverse”.
Shares of Meta Platforms recorded the biggest daily drop since its inception yesterday, dropping more than 25%, resulting in a loss of more than $ 230 billion in capitalization.
The sharp drop in the company’s stock value, which now stands at about $ 660 billion, is the biggest “loss” in the history of the US stock market, according to data from Bloomberg.
Meta’s share “sinks” after the disappointing quarterly profit report, where the technology giant’s forecasts for revenue were below expectations, while he warned that its activity is facing serious challenges this year.
Investors “got rid” of the tech giant’s shares amid concerns both about slowing user growth and rising costs associated with focusing the company on augmented and virtual reality.
Even more disappointing, Meta announced that Facebook lost daily users for the first time in its history, as the activity of its core platform slowed down, with company executives “blaming” the growing competition from companies such as TikTok for this fall. .
In addition, CEO Mark Zuckerberg has diverted most of the company’s resources to developing his “post-universe” idea: Facebook spent more than $ 10 billion on metaverse last year and expects a further “significant increase” in that cost. in 2022.
Zuckerberg is poorer by almost $ 30 billion
The fall in Meta’s stock also made Zuckerberg much poorer, with Facebook co-founder’s net worth falling $ 29.7 billion on Thursday, according to Forbes estimates.
Mark’s fortune now stands at $ 84.8 billion, falling below the $ 100 billion mark for the first time since last year.
“This is not just a disappointing quarter, but more of a turning point for Meta,” said Vital Knowledge founder Adam Chrysafouli. prolonged period of low returns – this will make it difficult for the stock to recover quickly “, he adds.
While Meta’s short-term growth prospects are “disappointing”, 2022 will be a significant year for the company as it accelerates its transition to the “post-universe”, according to Bank of America analysts who maintain the “market” recommendation. for the share. While factors such as increased competition from TikTok, challenges related to changes to Apple’s advertising status on iOS, and growing investment in metaverse will affect profits, Facebook is expected to recover in the second half of 2022, according to with BofA analysts.
The course so far
Since it was listed on the stock exchange with a valuation of about $ 100 billion in 2012, Facebook has recorded a rise in its share every year, with the exception of 2018, while it started this year with a capitalization of almost 1 trillion. dollars. The latest financial results and the subsequent sell-off of the share, however, mark a dramatic change in the “luck” of the company that for years saw its share record high and has overcome heaps of scandals.
The last time the Facebook share recorded a significant “dip” was in March 2018, when the company was targeted by fierce “fires” for the management of personal data of its users, in the context of the Cambridge Analytica scandal. The social network share had sunk by almost 20% during the scandal, but fully recovered in less than two months after the company announced strong quarterly profits and Zuckerberg testified several times before Congress.
The stock also plunged 19% in late July 2018, when the company focused on news via Facebook and Instagram (leaving Newsfeed) and announced quarterly earnings that disappointed investors. However: “We saw it happen in the second quarter of 2018, when Facebook went from Feed to
“Revenue growth slowed for three quarters before accelerating again,” said James Lee of Mizuho in a recent note.