Meta Platforms Inc. dropped 25% on Thursday, its worst one-day slump since February. This slump came after CEO Mark Zuckerberg implored investors for patience with the social media giant’s investments in unproven ventures. Meta’s market value sank to $268 billion, down from more than $1 trillion in September of 2021. This means that its market value has collapsed by a whopping $676 billion this year. Meta has now lost its ranks amongst the 20 largest US companies.
Virtual reality, according to Mark Zuckerberg, was the new frontier that was projected to aid Facebook’s rise. The virtual-reality fueled gathering network was marketed to revolutionize work and communication. However, there hasn’t been much of it yet. The effort is losing Meta billions, and the company expects to lose more money on the metaverse bet next year. Meta’s decision to hinge the company’s future on the metaverse has also raised eyebrows among investors and analysts.
The corporation, which also owns WhatsApp, is facing trouble as businesses slash their advertising spending. Changes to Apple’s privacy settings also hurt its ability to target ads. This change means consumers can ask apps to not track them, which Facebook has said will cost it $10 billion this year. Moreover, competition from apps like TikTok is escalating.
It’s a long cry from the situation the business found itself in on October 28, 2021, when Zuckerberg made the fanfare-filled announcement that Facebook was changing its name to Meta Platforms to underscore its focus on the “metaverse”.
Investor confidence plunged in February, when the company revealed it had lost daily users for the first time ever. Then in July, the company reported its first quarterly decline in revenue, as companies spooked by the economic landscape cut their advertising budgets.
Tech companies other than Meta have also fallen victim to the current economic climate. Sales fell short of expectations at both YouTube and Google, which had been particularly resilient to this year’s decline in digital advertising. Snap Inc. spent the whole year scaling back and refining its business, but the company recorded the worst quarterly revenue growth ever this week. Following Meta’s report, shares of Snap and Pinterest Inc. both decreased.