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Meta suffers largest 1-day wipeout in US history with $240B loss. Here’s why it happened

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  • The market capitalization of Meta stock fell by 26.4 % on Thursday, amounting to approximately $240 billion.
  • It was the greatest single-day value decline in US business history.
  • After the markets closed on Wednesday, Meta reported catastrophic fourth-quarter earnings.

UNITED STATES – Meta on Thursday suffered the largest one-day wipeout in US corporate history after posting a shocking earnings report Wednesday.

Its valuation plummeted by over $240 billion as its shares sank 26.4 percent.

After the markets closed, Meta, formerly known as Facebook, reported $10 billion in losses while constructing the metaverse in its last earnings call, and the consequences was unimaginable. As soon as the stock market opened on Thursday, the value of Meta shares dropped by more than 26 percent, wiping out $240 billion of the company’s value in a single afternoon, according to Fortune.

Mark Zuckerberg never said that creating the metaverse would be simple or quick. He anticipated that the challenge would be difficult, and he even successfully poached 100 engineers from Apple.

Reality Labs, the company tasked with building the metaverse, claimed a quintupling of its income from three years earlier, despite incurring a loss of slightly more than $10 billion while constructing Zuckerberg’s vision of the metaverse. While the losses were expected, the investor backlash came as a surprise just a few months after the company switched to the metaverse.

As per Business Insider, Meta stock dropped from $323 to $237 at the end of the day on Thursday, reducing its valuation from roughly $900 billion to $661 billion in a matter of hours. This is the largest business wipeout in US history, dwarfing Meta’s own collapse in July 2018, when the company, then known as Facebook, lost $119 billion in valuation.

Fortune also noted that Meta’s declared profits of $3.67 per share fell far short of the $3.85 per share that investors expected, and that the business expects moderate profits of up to $29 billion in the following quarter, compared to the market expectation of $30.15 billion.

While the decline in revenues is being linked to Apple’s privacy policies, which have hit social media players in general, the drop in stock price also indicates that Meta is unlikely to find a way out of this anytime soon.

The company’s troubles have been exacerbated by the first-ever dip in total user numbers since it began operations. Fortune also reported that Meta’s daily active user counts were 1.93 billion, compared to investor projections of 1.95 billion, raising concerns about the company’s market saturation.

The metaverse would be one method for the company to attract more users in the future, but Meta, even with its big riches, needs to make a compelling case for spending billions creating it in order to convince its investors of its ambition. For the time being, it appears that Facebook hastened its rebranding to Meta in order to assuage whistleblower worries and separate its products from the unfavorable exposure that they were receiving.

The fall in valuation has also impacted Zuckerberg, whose personal worth has dropped by $31 billion, dropping him to tenth place in the Bloomberg Billionaires Index following a year that has been extremely beneficial to Big Tech corporations. Alphabet, Google’s parent company, recently announced a 20-for-1 stock split after its shares had been lingering around $2,800 since October of last year.

It will be interesting to observe how Zuckerberg’s pivot works out in the company’s advantage in the coming months.

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