Meta's share price wipe-out shakes world tech stocks
Send a link to a friend
[February 04, 2022] By
Danilo Masoni, Akash Sriram and Noel Randewich
(Reuters) - Shares of Facebook owner Meta
plummeted 26% on Thursday, the biggest single-day slide in market value
for a U.S. company, after the social media giant issued a dismal
forecast, blaming Apple Inc's privacy changes and increased competition.
The huge drop, erasing over $200 billion from Meta's market
capitalization and around $29 billion from Chief Executive Officer Mark
Zuckerberg's net worth, spilled over to the broader technology sector
and dragged the Nasdaq Composite Index lower. It was the biggest slide
in market value for a U.S. public company, according to a Reuters
analysis of Refinitiv data.
It marked the company's worst one-day loss since its Wall Street debut
in 2012.
"Meta CEO Mark Zuckerberg may be keen to coax the world into an
alternate reality, but disappointing fourth-quarter results were quick
to burst his metaverse bubble," said Laura Hoy, an equity analyst at
Hargreaves Lansdown.
Big U.S. tech-focused companies have come under mounting pressure in
2022 as investors expect policy tightening at the U.S. Federal Reserve
to erode the industry's rich valuations following years of ultra-low
interest rates. The Nasdaq, which is dominated by tech and other growth
stocks, fell more than 9% in January, its worst monthly drop since the
coronavirus-induced market crash in March 2020.
![](http://archives.lincolndailynews.com/2022/Feb/04/images/ads/current/farmersbank_lda_LUAL_2021.png)
"The downgrade in the earnings outlook by Meta and other companies took
markets by surprise," said Kenneth Broux, a strategist at Societe
Generale in London.
"The tech selloff spilled over to broader equity markets this morning
and with the Fed preparing to raise interest rates, we could see more
volatility going forward," he said.
After the market closed, social media platforms Pinterest and Snap
posted strong quarterly reports that sent their shares soaring 17% and
52%, respectively, more than reversing losses from earlier in the day.
Their reports also sent Twitter up 8%, and helped Meta recover 1%.
Meta was a widely held stock by various investor groups, including hedge
funds, according to recent data, leaving a number of funds potentially
exposed by the wipe-out in its shares. Other institutional investors
were also heavy owners.
It was also a popular stock for retail investors, who appeared to be
enthusiastically buying the dip.
Some portfolio managers also saw a reason to buy. David Jeffress,
portfolio manager at Laffer Tengler Investments, said on Thursday the
firm is looking to add to its stake in Meta as the stock declines.
Jeffress pointed to strong or increasing numbers Meta reported for user
engagement, advertising and revenue per user.
[to top of second column] |
![](../images/020421pics/busine1.jpg)
Small toy figures are seen in front of displayed Facebook's new
rebrand logo Meta in this illustration taken, October 28, 2021.
REUTERS/Dado Ruvic/Illustration/File Photo
![](http://archives.lincolndailynews.com/2022/Feb/04/images/ads/current/guzzardos_lda_LUAL_2017.png)
"The results, taken in their entirety, were okay. It was the guidance that
spooked people," Jeffress said. He called the trading declines "an
overreaction."
The stock's drop was in addition a boon for investors betting on a decline in
the company's shares. Short sellers in Meta were poised to increase their
potential 2022 gains to more than $2 billion with Thursday's plunge, according
to S3 Partners.
With Big Tech firms like Apple and Microsoft ballooning in valuations in the
past few years, they have also become more susceptible to investor whiplash,
often resulting in losses worth tens of billions of dollars in a single day of
trade.
Apple shed nearly $180 billion on Sep. 3, 2020, while Microsoft lost $177
billion on March 16 in the same year.
Meta reported a decline in daily active users from the previous quarter for the
first time as competition with rivals like TikTok, the video sharing platform
owned by China's ByteDance, heats up.
The disappointment over Meta's earnings and the subsequent stock fall invoked
memories of the bursting tech bubble in 2000.
Investors seem to be becoming highly selective after the sector's
record-breaking run in recent months.
According to research firm Vanda, purchases from retail investors in late 2020
and early 2021 were focused on expensive tech, EVs and so-called "meme" stocks.
In the past week purchases of large-cap tech have skyrocketed while speculative
assets have seen very little demand.
Other social media stocks were also hit hard on Thursday, including Twitter,
Pinterest and Spotify. Spotify has been beset by a row over COVID-19 vaccination
misinformation and also released disappointing results.
(Reporting by Akash Sriram, Subrat Patnaik and Tanvi Mehta in Bengaluru and
Danilo Masoni in Milan; Additional reporting by Medha Singh; Additional
reporting by Ross Kerber and Dan Burns in New York; Editing by Arun Koyyur,
Saikat Chatterjee, Mark Porter, Saumyadeb Chakrabarty, Megan Davies and Bernard
Orr)
[© 2022 Thomson Reuters. All rights
reserved.]This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](http://archives.lincolndailynews.com/2022/Feb/04/images/ads/current/beltone_lda_LUAL_2021.png) |