Shares of Meta, the parent company of social networking site Facebook, plunged 26 percent today, the biggest one-day drop in U.S. corporate market capitalization. The social media giant earlier released discouraging financial results, saying that the problem lies in growing competition.
Meta’s avalanche of shares caused the company’s market value to evaporate by more than $200 billion (about NT$5.5 trillion), and CEO Mark Zuckerberg’s net worth was instantly reduced by $29 billion. Technology stocks were also affected, with the Nasdaq Composite Index falling in response.
Reuters analyzed data from financial information provider Refinitiv and found that it was the biggest drop in market value for a U.S. listed company and the biggest one-day loss for Facebook since the company went public in 2012.
Meta chief executive Mike Zuckerberg may have been keen to persuade the world to an alternative reality, but disappointing fourth-quarter results quickly burst his metaverse bubble,” said Laura Hoy, an equity analyst at British financial services firm Hargreaves Lansdown.
Large technology-based U.S. companies are under increasing pressure this year as investors expect the Federal Reserve Board to begin tightening policy after years of ultra-low interest rates, undermining the technology sector’s lucrative valuations.
The Nasdaq index, which is dominated by technology and other growth stocks, fell more than 9% in January, the largest one-month decline since the market collapse caused by the COVID-19 (Coronavirus Disease 2019) outbreak in March 2020.
The market value of large technology companies such as Apple and Microsoft has been expanding over the past few years, but they are also more susceptible to investors, often causing tens of billions of dollars of losses in a single trading day. Apple lost nearly $180 billion on Sept. 3, 2020; Microsoft lost $177 billion on March 16 of the same year.
Meta reported that the number of daily active users on its platform declined for the first time from the previous quarter as competition with rivals such as TikTok, China’s ByteDance video sharing platform, heated up.
People have a lot of options for how to spend their time, and apps like TikTok are growing fast,” Zuckerman told investors, according to U.S. media reports.