Shares of Meta (Facebook) plummeted 25% today on Wall Street, following disappointing financial results, possibly causing losses of nearly $200 billion from the capitalization of Mark Zuckerberg’s group.
At 16.35′ Greek time, the share of Meta Platforms, parent company of Facebook, fell sharply by 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, announced yesterday, Wednesday, after the closure of transactions, reduced profits in the fourth quarter and a prospect of slower growth in the first quarter of the year.
The huge drop in Facebook’s share price came at a time when the company is making a major shift to virtual reality, as Mark Zuckerberg had long ago announced. This is the biggest drop in Meta shares in its history.
The previous big drop was recorded on July 26, 2018, when $ 120 billion was “lost”.
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What has been happening in the company lately?
1) Facebook announced on Wednesday that its profits fell by 8%, or $10.29 billion in the last quarter of 2021. What’s strange, though, is that the same announcement states that revenue increased by 20% , or $33.67 billion.
2) How is it possible to increase revenue but decrease profits? According to analysts, this…incompatibility is due to the costs for the Reality Labs department, that is the department that will “launch” the future of the online world, virtual reality. According to reports, Meta has already invested more than $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 people for advertising purposes, which also puts pressure on the company’s revenue. In a teleconference with analysts on Wednesday, Meta’s chief financial officer said the company was facing $10 billion in “deferred consequences” from Apple changes in 2022. Analysts at MoffettNathanson, in a note to customers, described the estimate as “surprising”.
4) Meta forecast revenue much lower than analysts’ expectations for the current quarter, partly due to growing competition from TikTok, the company said, clearly influencing investors.
