Meta Platforms experienced the largest single-day stock market meltdown in history. Shares have decreased by about 26% since the owner of Facebook disclosed failed quarterly results and a steadily declining user base on Wednesday. The market value of the company’s stock has decreased by roughly $230 billion since Wednesday’s closure, making it the American company with the largest market value decline.
The markets have been erratic overall in recent weeks, and the tech industry, in particular, has experienced some drops recently.
When the market closed on Thursday, Meta was trading at $237.76, and Twitter, Snap, and Pinterest were all trading at a loss. Earlier, Meta had a market cap of about $900 billion.
When reporting its Q4 earnings on Wednesday, Facebook’s parent company, Meta, missed EPS forecasts but met revenue estimates. Revenue for the company’s most recent quarter came in at $33.67 billion, exceeding analyst projections of $33.41 billion.
The organization, which changed its name to Meta in October of last year, announced last quarter’s sales of $29 billion, which was in line with analyst projections from the prior year. Its sales and earnings growth started to slow down after experiencing a pandemic increase in internet activity in 2020.
The number of users on Facebook increased only 4% year over year this quarter, from 2.9 million reported in the previous quarter to 2.91 million monthly active users. The platform’s daily active users dropped from 1.930 billion to 1.929 billion globally from the previous quarter, marking the first dip.
What Were The Causes That Cost This Biggest Loss?
Here are some observations due to which meta faces such a giant loss:
- Apple updated its mobile operating system this spring with “App Tracking Transparency,” effectively allowing iPhone users to decide whether to allow apps like Facebook to track their online activities. These privacy-related actions have already harmed Meta’s business and will probably do so going forward.
Many users have chosen to not allow Facebook and other applications to follow their online activities now that they must explicitly ask for permission. With fewer user data, Facebook will have a harder time targeting advertisements, which is one of the company’s key revenue streams.
- Mr. Zuckerberg has made note of TikTok’s serious opponent status. The Chinese-backed app’s short video posts, which are incredibly viral and curiously addictive, have helped it gain more than a billion users. And it is fiercely vying for users’ attention with Meta’s Instagram.
With its Instagram Reels video product feature, Meta has imitated TikTok. Reels, which are prominently featured in users’ Instagram feeds, are currently the top source of engagement for the entire app, according to Mr. Zuckerberg, who made this statement on Wednesday.
- Meta is not a monopoly in the social networking space said, Mr. Mark Zuckerberg. He has vehemently referred to the “exceptional levels of competition,” which include TikTok, Apple, Google, and other potential rivals.
However, it is now harder for Meta to buy its way into emerging social networking movements due to the prospect of antitrust litigation. In the past, as such services accumulated billions of users, Facebook acquired Instagram and WhatsApp with little examination.
Regulators throughout the world have now contested even some of Meta’s purchases in virtual reality and GIFs, which at first glance seemed less controversial.
- The difficulties Meta has faced have been fortunate for its rivals. The chief financial officer of Meta, David Wehner, remarked on Wednesday that many marketers have started moving their ad expenditures to other platforms as a result of Apple’s changes giving them less access to user activities. that is Google.
This week, Google reported record sales, particularly in its e-commerce search advertising, in its earnings call. The last three months of 2021 saw Meta stumble over the exact same category.
- From the company’s 18-year existence, its capacity to attract more new consumers had essentially defined it. The decline indicated that the core app might have peaked.
The rate of user growth for Meta’s most recent quarter was also the slowest in at least three years. Executives at Meta have identified more growth prospects, such as opening the cash register at WhatsApp, the messaging service that hasn’t yet produced a sizable profit.