Meta’s huge share price drop shakes world tech stocks
Reuters | California
The Daily Tribune – www.newsofbahrain.com
Shares of Facebook owner Meta (FB.O)fell 26% yesterday in what could be the worst single-day wipeout in market value for a US company, after the social media giant issued a dismal forecast, blaming Apple Inc’s (AAPL.O) privacy changes and increased competition.
The huge drop, erasing over $200 billion from Meta’s market capitalization, spilled over to the broader technology sector and dragged the Nasdaq Composite Index (.IXIC) lower. If losses hold, it would mark the company’s worst one-day loss since its Wall Street debut in 2012.
“Meta CEO Mark Zuckerberg may be keen to coax the world into an alternate reality, but disappointing fourth-quarter results were quick to burst his metaverse bubble,” said Laura Hoy, an equity analyst at Hargreaves Lansdown.
Big US tech-focused companies have come under mounting pressure in 2022 as investors expect policy tightening at the US Federal Reserve to erode the industry’s rich valuations following years of ultra-low interest rates.
The Nasdaq, which is dominated by tech and growth stocks, fell more than 9% in January, its worst monthly drop since the coronavirus-induced market crash in March 2020. “The downgrade in the earnings outlook by Meta and other companies took markets by surprise,” said Kenneth Broux, a strategist at Societe Generale in London.
“The tech selloff spilled over to broader equity markets this morning and with the Fed preparing to raise interest rates, we could see more volatility going forward,” he said. The stock’s drop was a boon for investors betting on a decline in the company’s shares.
Short sellers in Meta were poised to increase their potential 2022 gains to more than $2 billion with Thursday’s plunge, according to S3. With Big Tech firms like Apple and Microsoft ballooning in valuations in the past few years, they have also become more susceptible to investor whiplash, often resulting in losses worth tens of billions of dollars in a single day of trade.
Apple shed nearly $180 billion on Sep. 3, 2020, while Microsoft lost $177 billion on March 16 in the same year. However, Meta’s massive selloff is set to eclipse those if losses hold. Other social media stocks were also hit hard on Thursday, including Twitter (TWTR.N), Pinterest (PINS.N) and Spotify(SPOT.N).
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