Shares of Meta slumped 26.4% on a single day of trading, wiping out $232 billion of market capitalization on the back of disastrous fourth-quarter earnings results. Meta Platforms Inc.’s one-day crash ranked as the worst in stock-market history.
The quarterly report on the last Wednesday indicates the missing profit expectations and a decrease in the number of daily users on Facebook for the first time. Meta has invested more than $10 billion to make Meta Platforms Inc. the heart of metaverse plans, but it is unlucrative. Meanwhile, the report shows a loss of approximately 1 million daily active users on Facebook due to the short-form video apps Tiktok. The social network may reach the peak of its growth.
The loss in income from Advertising on the Meta platform is also attributed to the App Tracking Transparency policy of Apple. The policy allows Apple product users to opt whether they want to be tracked on the internet by firms, like Facebook. Finding information of the Meta platform users and selling that information to exact advertisers is how it makes money. This is an inextricable problem for the long term.
The prices witnessed a decline of 26%. However, the actual earnings are above the expectation of the analysts from Reuter. On top of that, the PE is now 18 times, well below the average stock in the [S&P 500].
Source: Source: Ycharts.com
“When you have an emotional market … the selling will not be like normal selling. It gets angry. It’s chaotic. It’s extra irrational. It won’t necessarily be over in a day,” reported Jim Cramer on CNBC.