Stock markets plunged Thursday following disappointing quarterly results from Facebook-parent Meta and the announcement that it had lost users for first time in its history. The value of the social media giant plunged by $237 billion, which is the largest one-day loss in stock market history for publicly traded companies. The Dow lost 1.5% to close at 35.111 on Thursday. Meanwhile, the broad-based S&P 500 stock index fell 2.4%, and the tech-heavy Nasdaq composite dropped 3.7%.
Meta shares fell $85.24, or 26% to close at $237.76. The news company stated that Microsoft’s March 2020 market cap fell $178 billion, which is the largest loss after Apple. Meta’s Thursday stumble brought down other social media companies. Snap shares fell 23%, while Twitter shares dropped 5.6%. The enormous size of Meta — it was worth nearly $900 billion at the time it crashed — highlights the power that tech giants now hold over the stock market, and the fortunes investors large and small.
Meta’s profit fell last quarter. CEO Mark Zuckerberg said that this was due to increased competition from TikTok, as well as a shift in how users interact with content on Facebook and Meta owned Instagram. Analysts noted that Facebook is investing heavily to attract a younger audience.
Last year, the company spent $10 billion on Reality Labs, which is developing its Metaverse service. Zuckerberg called it “the successor to the mobile internet.”
“Although [Meta] seems to be looking to retool in order to better serve a younger demographic (18-29 years old), it will take considerable time and will come at an expensive price,” Angelo Zino, senior analyst at CFRA Research said. He reduced his 12-month price target for Meta’s stock from $357 to $294 per share. Facebook’s customer base fell from 1.93 billion to 1.929 miliarde daily active users. The dip in user base is not significant, but it raises concerns about Meta’s growth prospects.
Zuckerberg attributed the decline in users to increasing competition from competitors like TikTok.
Zuckerberg told investors on Wednesday that people have many options for how they spend their time.
Editor’s Note: The original story stated that Facebook experienced the largest single-day drops in market value in its history. This is false. Bloomberg News reports that Apple suffered the second-largest single drop in market capitalization, when its value plummeted $180 billion in September 2020.