The backstory:
- Meta Platforms, Inc.’s Facebook is dealing with a lot. It’s obviously not a favorite of many lawmakers around the world, often being on the receiving end of anti-monopoly and privacy issue probes.
- In October of last year, the company rebranded itself to Meta Platforms, betting on the metaverse becoming the next big thing and also, some say, to get rid of all the scrutiny surrounding the Facebook name.
- The company is also facing increasingly stiff competition from companies like TikTok, a favorite for Gen Zs.
- Meanwhile, Apple Inc. has put in place some tracking controls for users who can now ask not to be tracked by apps, hurting the profits of companies reliant on knowing what you’re doing online (like Facebook). All the while, a lot of businesses/advertisers have cut back their ad budgets because of their increased costs from issues like supply chain disruptions.
- Also, major United States tech companies have come under more pressure as central banks taper economic stimulus and investors expect the central bank to increase interest rates.
- In the opening weeks of this year, the so-called FAANG group of Facebook, Amazon, Apple, Netflix and Google’s Alphabet has seen around US$400 billion in market capitalization wiped out while cheaper segments of the markets become more attractive.
The development:
- On Thursday, Meta’s shares fell 27% in what could be the worst single-day wipeout in market value for a US company.
- This is after the social media giant issued a dismal forecast, pointing to Apple’s privacy changes and increased competition for its numbers. Meanwhile, its user growth seems to have hit a ceiling, and its momentum is stalling.
- The considerable drop, erasing over US$200 billion from Meta’s market capitalization, spilled over to the broader technology sector and dragged the Nasdaq Composite Index lower. This is after the Nasdaq, 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.
- From this, Chief Executive Officer Mark Zuckerberg may also see his personal wealth drop by around US$24 billion.
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