Meta erases more than $230 billion in value, biggest wipeout in history
Meta Platforms Inc.’s one-day crash now ranks as the worst in stock market history.
The Facebook parent plunged 26% on Thursday on the back of woeful earnings results, erasing more than $230 billion in market capitalization. That’s the biggest wipeout for any U.S. company ever.
And although the stock could certainly bounce back in coming days, especially given the volatility that has gripped the technology sector this year, the mood on Wall Street has turned decidedly bleak regarding the longtime market darling.
Analysts are pointing to the stiff competition that Meta now faces from rivals and to the fact that revenue was below expectations as causes for concern. Michael Nathanson, an analyst at brokerage Moffett Nathanson, titled his note “Facebook: The Beginning of the End?”
“These cuts run deep,” he wrote. The results were “a headline grabber and not in a good way.”
The sheer size of Meta’s collapse illustrates just how tech companies have ballooned in size to become behemoths with unprecedented market power, and the drama that can ensue when they stumble.
“Lots of U.S. mega-caps are priced as growth stocks. They may suffer more in a rising yield environment, especially if growth becomes more questionable,” said Frederic Rollin, senior investment advisor at Pictet Asset Management.
Another way of illustrating the decline: Meta’s decline would be greater than the market capitalization of more than 460 of the Standard & Poor’s 500 index’s members.
Facebook has long emphasized the strength of its efforts to contain misinformation targeted at Latinos and Spanish speakers. A whistleblower’s leaks show employees raising alarms about the problem.
Meta “finds itself in the middle of a perfect storm,” wrote Youssef Squali, an analyst at Truist Securities.
Twitter Inc., Snap Inc. and Pinterest Inc. all closed lower Thursday, leaving the Nasdaq composite down 3.7% at the close. All three rallied strongly in after-hours trading, however, while Facebook remained flat.
Meta’s market cap as of Wednesday’s close had been roughly $900 billion. The company makes up one of the original “FAANG” cohort of tech mega-caps, including Amazon.com Inc., Apple Inc. and Google parent Alphabet Inc.
It’s not the first time Meta shares have dropped dramatically. The stock plunged 19% in July 2018 on a slowdown in user growth, translating to a decline of about $120 billion in market capitalization. At the time, it set the record for the largest-ever loss of value in one day for a U.S.-traded company.
“We’re hopeful the company kitchen-sinked the outlook,” said Shyam Patil, an analyst at Susquehanna Financial Group.
Bloomberg writers Nikos Chrysoloras, Farah Elbahrawy, Divya Balji, Albertina Torsoli and Matt Turner contributed to this report.
