Meta loses $230 billion in value in the biggest single-day crash, following Q4 earnings
India Today
Meta's recent earnings call has not gone down well with investors as many are now wary of the company's drop in active users as well as the various threats to its ad revenue.
Meta's financial results for the fourth quarter of 2021 has led to a rather dramatic chain of events for the company and its co-founder. Since Meta released the results showing a drop in the daily active users for Facebook, its shares are now 25 per cent down than before. It is now being reported as the biggest one-day crash in stock market history.
In case you are looking for numbers, know that Meta's market value has dropped by more than $230 billion or just over Rs 17 lakh crore since its earnings call. It is not just the company that faced the massive plummet in the stock market. Since much of his net worth is associated with Meta's stock, Mark Zuckerberg lost about $30 billion or more than Rs 2 lakh crore following Meta's financial results for Q4, 2021.
The tremendous dip, said to be the biggest in the US stock market's history, was because of two key reasons highlighted in the report. One, quarter 4 of last year showed, for the first time ever, a declining number of daily active users for Facebook. The company blamed this on increased competition from TikTok as well as the price hike in the internet data in India.
In any case, a decline in the number is only suggestive of a drop in Facebook's long-established dominance in the world of social media. Facebook's active users dropped to 1.929 billion from a previous of 1.930 million in Q3 2021. This means that the company lost around a million users within these months.
Since most of Meta's revenue relies on its advertisements through its various online platforms, a drop in active users points to a subsequent decline in the ad revenue from these entities, including Facebook and Instagram. There is, though, one other issue that hampers Meta's ad revenue.
Remember the long and public battle between Apple and Meta (Facebook at the time) about the former's new privacy feature? Well, it has come back to bite Meta now. Apple's App Tracking Transparency (ATT) feature may impact Meta's ad revenue by $10 billion this year, as per the company's estimates. The prediction served as yet another red sign for investors in the company's stocks.
As reported by Forbes, the earnings call also revealed that the company spent $10.1 billion on its metaverse plans in 2021. While Zuckerberg pursues this new area of interest for the global tech community, Meta may face a hard time sticking to its roots going forward.
