Meta Platforms, the parent company of Facebook saw its share price tank a massive 26.39% on Thursday. Meta stock price nosedived as investors reacted to the company’s quarterly earnings. With the sharp fall in Meta stock price, $251 billion was wiped off the company’s market value. This is more than the entire market capitalization of India’s largest listed company Reliance Industries Limited. Technology stocks on Wall Street are facing the heat with all Apple, Amazon, Netflix, Google, and Microsoft trading with losses year-to-date. Facebook shares have tanked nearly 30% so far this year to trade at $237.76 per share, with the majority of the losses coming on Thursday.
“Meta’s results killed the tech comeback that was forming since the end of last week. Meta’s results were fine, but the outlook is truly disappointing. Meta will struggle over the next few quarters as the company struggles to deliver growth and rein in surging metaverse costs,” Edward Moya, Senior Market Analyst, OANDA told Financial Express Online. Meta reported a 20% on-year jump in total revenue during the October-December quarter, but expenses were 38% higher. Net income during the quarter dropped 8% from the previous year.
Facebook’s parent, earlier in 2021, changed its name to Meta platforms. “Today we are seen as a social media company, but in our DNA we are a company that builds technology to connect people, and the metaverse is the next frontier just like social networking was when we got started,” Mark Zuckerberg had said. The bet on Metaverse has taken a toll on Meta for now. “Meta is facing a major slowdown and that could cripple advertising growth as the company has made an expensive bet with the metaverse,” Edward Moya said. He added that the company is also failing to win over young people, something that is key to growth. “They might need to focus on acquisitions to make up for this shortfall,” he added.
Other technology companies on Wall Street have also taken a beating recently with none of the famous FAANGM stocks trading in the green on a year-to-date basis. Additionally, Twitter, Snap, and Tesla are also in the red.
Edward Moya does not believe investors would find the Facebook stock attractive for a while. “Meta could see further weakness over the short-term and the long-term outlook is up in the air. Eventually, Meta might look attractive at a massive discount, but that might not be for a while,” Moya said. “A wrath of analysts will say it is time to abandon ship following Meta’s margin erosion and headwinds for both growth and advertising revenue,” he added.