Meta shares plummet as Wall Street tech bubble begins to burst
Shares in Facebook owner Meta fell 20 per cent in U.S. premarket trade today after the social media giant issued a dismal forecast, blaming Apple’s privacy changes and increased competition.
The huge drop, which comes before Amazon earnings later in the day, spilled over to Europe, where technology stocks posted some of the steepest declines and soured the mood across global financial markets in another busy day of central bank meetings.
Meta was set to lose a fifth of its market value, erasing about $200 billion. If the premarket losses hold, 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.
Meta said yesterday evening it was expecting current-quarter revenue below Wall Street expectations, as Apple privacy features keeps businesses from opting to advertise on social media sites.
Shares of the company fell over 18 per cent after the bell.
It forecast first-quarter revenue in the range of $27bn to $29bn. Analysts were expecting $30.15bn, according to IBES data from Refinitiv.
Apple’s changes to its operating software gives its users the preference to allow tracking of their activity online, making it harder for advertisers who rely on data to develop new products and know their market.
The company’s total revenue, the bulk of which comes from ad sales, rose to $33.67bn in the fourth quarter from $28.07bn a year earlier, beating analysts’ estimates of $33.40bn, according to IBES data from Refinitiv.
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.
Meta said about 3 per cent of worldwide monthly active users in the fourth quarter consisted solely of violating accounts while duplicate accounts may have represented about 11 per cent of usage.
“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, told Reuters.
“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.