Meta Platforms' weak forecast sparks meltdown of social media stocks
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[February 03, 2022] By
Noel Randewich
(Reuters) - Facebook owner Meta Platforms
Inc's quarterly earnings miss and poor forecast on Wednesday ignited a
meltdown in social media stocks and threatened to smother a recent
recovery from a Wall Street tech selloff.
Meta tumbled 21% following its quarterly report after the bell, erasing
about $200 billion worth of its stock market value. A decline of this
size in Thursday's session would mark the company's worst one-day loss
since its Wall Street debut in 2012.
The owner of Facebook and Instagram said it was expecting
current-quarter revenue between $27 billion and $29 billion, missing the
consensus analyst estimate of about $30 billion.
Twitter Inc and Pinterest Inc each tumbled about 10%, zapping over $4
billion in market capitalization. Snap Inc slumped 18%, losing $9
billion in stock market value.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., January 26, 2022. REUTERS/Brendan McDermid
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"This is a very unforgiving environment and this is likely an over-reaction for
companies with strong balance sheets. But we are seeing clearly that investors
are skittish and they will hit the sell button first and ask questions later,"
said Michael Farr, chief executive of Farr, Miller & Washington LLC.
The rout reached beyond social media, with Amazon.com Inc down 3% in extended
trade ahead of its quarterly report on Thursday. Alphabet Inc dropped 1.9%,
surrendering part of a 7.5% rally it enjoyed earlier in the day following its
blowout quarterly report on Tuesday.
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