Cheer up Mark, the share price might have done better in the metaverse…
Meta faced its worst single-day wipeout yesterday, as shares plunged over 25 per cent, slashing $220bn (£162bn) off the company’s value.
It comes after Facebook’s owner reported dismal results on Wednesday night, citing Apple’s privacy changes and “increasing competition” as the key drivers for its demise.
“Meta’s quarterly results confirmed what investors were already worried about”, Laura Hoy, Equity Analyst at Hargreaves Lansdown, told City PM
“It was a perfect storm for Facebook – with negative Q4 results and a lacklustre Q1 outlook on top of the existing sell off among tech stocks, investors didn’t need much of a nudge to shove shares off the cliff.”
The tech giant, which also owns Instagram, reported a quarterly decline in daily active users for the first time, and signalled that ad revenue was stagnating due to tighter budgets and inflation.
Mark Zuckerberg’s Meta has struggled to maintain the attention of younger audiences, as teenagers continue to flock to rival, TikTok.
The tech-heavy Nasdaq fell 2.2 per cent as shares of other social media firms also took a beating. Twitter and Pinterest dropped more than five per cent, while Snapchat lost over 20 per cent.
“This is definitely shaking investors’ resolve around the recent relief rally that we’ve been seeing in tech,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.
“There’s also a bigger problem going on, and that is higher interest rates and inflation.”
But whilst yesterday’s outlook appeared particularly bleak, Hoy emphasised: “Facebook is down but it is not out.”