Meta (Facebook) shares plummeted 25% today on Wall Street following disappointing financial results, potentially causing a loss of nearly $200 billion in market capitalization for Mark Zuckerberg's group.
At 4:35 p.m. CY time, shares of Meta Platforms, Facebook's parent company, plummeted 25.81% to $239.56, causing the Nasdaq index to fall (-2.29%).
The social media giant, which lost users in North America for the first time in its history, reported yesterday, Wednesday, after the close of trading, lower fourth-quarter earnings and an outlook for slower growth in the first quarter of the year.
This huge drop in Facebook's share price came at a time when the company is attempting a major shift to virtual reality, as Mark Zuckerberg announced some time ago.
This is the biggest drop in Meta's share price in its history. The previous big "plunge" was recorded on July 26, 2018, when $120 billion was "lost."
What's been happening at the company lately?
1)Facebook announced on Wednesday that its profits fell by 8%, or $10.29 billion in the last quarter of 2021. The oxymoron in this particular case lies in the following element: In the same announcement it is stated that revenues increased by 20%, i.e. by $33.67 billion.
2)How is it possible for revenues to increase but profits to decrease? According to analysts, this discrepancy is due to spending on the Reality Labs division, the division that will "launch" the future of the online world, virtual reality. According to reports, Meta has already invested over $10 billion in this technology and is expected to spend even more funds.
3)Recent privacy changes by Apple make it more difficult for companies like Meta to track individuals for advertising purposes, which also puts pressure on the company's revenues. In a conference call with analysts on Wednesday, Meta's CFO said the company faces a "cascading impact" of $10 billion from Apple's changes in 2022. Analysts at MoffettNathanson, in a note to clients, called that estimate "stunning."
4)Meta forecast revenue well below analysts' expectations for the current quarter, in part due to increased competition from TikTok, the company said, clearly impacting investors.
Accurate hiring and change of direction
Meta Platforms Inc. is set to implement Mark Zuckerberg's plan to change the social media landscape by installing a new virtual reality "world," as he announced a few months ago. Since then, the company has been shifting resources and hiring engineers from competitors like Apple and Google who can help realize his vision. It expanded its workforce by 23%, ending the year with 71,970 employees, mostly in technical roles, in order to accommodate the plan and accelerate the transition to the new world it is preparing to unveil on the web.
A world in which social platforms will not be about making private moments public, but about creating "private salons" of conversation, using holograms and new technology that will soon take over our daily lives.
Source: protothema.gr
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