Meta Platforms' one-day crash now ranks as the worst in stock-market history.
The Facebook parent plunged 26% on Feb 3 on the back of woeful earnings results, and erased about US$251.3 billion in market value. That is the biggest wipeout in market value for any US company ever.
And while the stock could certainly bounce back in coming days, especially given the volatility that has gripped the technology sector this year, the mood on Wall Street has turned decidedly bleak on the long-time market darling.
Analysts pointing to the stiff competition that Meta now faces from rivals and to the fact that revenue was below expectations as causes for concern. Michael Nathanson, an analyst at brokerage Moffett Nathanson, titled his note “Facebook: The Beginning of the End?”
“These cuts run deep,” he wrote. The results were “a headline grabber and not in a good way.”
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The sheer size of Facebook’s collapse illustrates just how tech companies have ballooned in size to become behemoths with unprecedented market power, and the drama that can ensue when they stumble.
“Lots of US megacaps are priced as growth stocks. They may suffer more in a rising yield environment, especially if growth becomes more questionable,” said Frederic Rollin, senior investment advisor at Pictet Asset Management.
Meta “finds itself in the middle of a perfect storm,” wrote Youssef Squali, an analyst at Truist Securities.
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Twitter, Snap and Pinterest all closed lower on Feb 3 and dragged the Nasdaq Index down 4.2%, its worst selloff since September 2020. Meta shares rose 1.4% after hours.
Meta’s market cap as of Wednesday’s close stood at roughly US$900 billion. The company makes up one of the original Faang cohort of tech megacaps, including Google’s parent Alphabet, Amazon.com and Apple.
It is not the first time Meta shares have dropped dramatically. The stock plunged 19% in July 2018 on a slowdown in user growth, translating to a about US$120 billion decline in market capitalization. At the time, it set the record for the largest-ever loss of value in one day for a US traded company.
“We’re hopeful the company kitchen-sinked the outlook,” said Shyam Patil, an analyst at Susquehanna Financial Group.
Photo and infographic: Bloomberg
