Facebook witnesses largest single-day stock crash in US history

On Thursday, shares of Facebook’s parent company, Meta, dropped by more than 26 percent in extended trading after the company reported disappointing earnings, gave weak guidelines, and stated that user growth has started to decline in Q4 2021.

The company also forecasted weaker-than-expected revenue growth in the next quarter and is also taking a big hit from Apple’s privacy changes, showing the first quarterly decline in daily active users ever recorded.

Meta’s stock finished with biggest one-day drop in US history. In July 2018, the company witnessed a 19% plunge in shares value. The recent drop shaved over $230 billion from the market cap, reducing it to about $660 billion.

In fact, a Refinitiv survey of analysts claims that the company’s revenue forecast of $27 billion to $29 billion for the first quarter fell below the expected $30.15 billion.

Facebook is also leaning towards products that generate less revenue in the short term, while executives believe those have large growth potential, such as Reels for Instagram.

Meta’s core social media business, reported under its Family of Apps, made $32.79 billion in revenue in the quarter with an operating income of $15.89 billion.

“We had a solid quarter as people turned to our products to stay connected and businesses continued to use our services to grow … I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse,” commented Meta founder and CEO Mark Zuckerberg

Meta also brought out its Reality Labs segment for the first time, composed of its future-focused business aimed towards developing the metaverse. The segment made $877 million in revenue in Q4 with an operating loss of $3.3 billion. The segment is reported to have lost $10 billion last year and continues to grow as the company places more bets on the metaverse.

Following Facebook’s plunge, stocks of other social media platforms also plummeted. Shares of Snap dropped down more than 23% on Thursday. Pinterest shares lost more than 10%, while Twitter shares were off by more than 5%.