The stock market opened sharply lower after Facebook-parent Meta on Wednesday reported disappointing quarterly results and said it lost users for the first time in its history. The social media giant’s value plunged by more than $220 billion — potentially the biggest one-day loss for a publicly traded company in stock market history.
The Dow Jones Industrial Average slipped 405 points, or 1.1%, to 35,223 in Thursday afternoon trading, while the broad-based S&P 500 lost 2%. The tech-heavy Nasdaq shed 3.1%.
Meta shares plunged $85.80, or 27%, to $237.20 in late afternoon trading.
Before Thursday, the largest single-day decline in market value was recorded by Apple, which shrank by $180 billion in September 2020, according to Bloomberg News. Microsoft’s market cap shed $178 billion in March 2020, making it the biggest loss following Apple, the news company said.
Meta’s stumble pulled down other social media companies, with shares of Snap losing 17% and Twitter dropping 6% on Thursday. Meta’s massive size — it was worth almost $900 billion before it tumbled — underscores the influence that the largest tech players now have on the stock market and on the fortunes of investors big and small.
Meta’s profits fell last quarter, which CEO Mark Zuckerberg attributed to increasing competition from rival TikTok and a shift in the way users engage with content on Facebook and Instagram. Analysts also noted that Facebook is investing heavily in new products to draw a younger audience, including its budding Metaverse business.
The company last year spent $10 billion on its Reality Labs unit, which is working on developing its Metaverse service, a virtual-reality platform that Zuckerberg has called “the successor of the mobile internet.”
“Although we think [Meta] is looking to retool to better serve a younger audience (18-29 age group), it will take significant time to fully execute and will come at a high price,” said Angelo Zino, senior equity analyst at CFRA Research, who cut his 12-month price target on Meta’s stock from $357 per share to $294.
Meantime, Meta’s core business saw a drop in its daily active users for the first time. Facebook’s customer base slipped from 1.93 billion daily active users to 1.929 billion. Although a small decline, the dip is raising investor concerns about Meta’s growth prospects.
Zuckerberg blamed the drop in users to mounting competition from rivals such as TikTok.
“People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly, ” Zuckerberg said on a call with investors Wednesday.
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