Is Meta Platforms’ (FB) US$250-bn loss biggest wipeout in US history?

Highlights

• Meta Platforms, Inc. (FB) lost around US$250 billion in market value in a single day.  

• The Dow Jones US Technology Total Stock Market Index’s total YTD decline widened to 10.97% after the stock rout. 

• Meta’s Wednesday stock rout triggered a massive tech selloff the next day. 

The Meta Platforms, Inc. (FB) suffered a massive loss this week after the stock plummeted around 26%, wiping out roughly US$250 billion in market value in a single day.

The disaster struck after the technology giant reported dismal fourth-quarter earnings in the extended-hours trading. It is the biggest single-day loss for a company in US history.

Announcing its fourth quarter and fiscal 2021 results on Thursday, the company noted that it faces major challenges in its ad business due to Apple Inc's (AAPL) privacy policy. Besides, it referred to increased competition from rivals, such as Tik-Tok short video app, for poor results.  According to Bloomberg, Meta Platform Inc took a hit of roughly US$250 billion on Wednesday.

The California-based company said it might lose up to US$10 billion in ad revenue in 2022 due to the iPhone policy. Meta Inc’s net loss from Reality Labs, the unit leading the metaverse project, rose to US$10.2 billion from a loss of US$6.6 billion a year ago. However, the total revenue of US$33.67 billion was more than its revenue in the corresponding period a year ago.

In the December quarter, its ad revenue rose to US$32.6 billion from US$27.1 billion a year ago. The revenue may have increased if there had been no iPhone privacy effect. CFO Dave Wehner told analysts that privacy changes and macroeconomic factors affected the results.

Wednesday’s slump led to a broader tech rout in the stock market the following day. The Dow Jones US Technology Total Stock Market Index’s total YTD decline widened to 10.97% after the Meta stock rout.

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Meta Platforms, Inc is part of the big FAANG Group, or the big five, whose other members are Amazon.com, Inc, Apple Inc, Netflix, and Google’s parent company Alphabet Inc.

However, it is not the only company to have suffered big losses, although not close to Meta Inc.

On September 3, 2020, Apple Inc. (AAPL) lost US$180 billion in market value in a single day, possibly due to a market course correction after the ballooning stock prices at that time. 

In addition, Microsoft Corporation (MSFT) and Tesla, Inc. (TSLA) have also experienced major single-day stock routs with more than US$100 million losses in 2020 and 2021. 

Also Read: Top 50 stocks on S&P 500 Index (Part II)

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Meta (FB) Stock Performance

In July 2018, the Meta Platforms Inc (FB) stock fell around 19% due to slower growth in user base. The stock’s short-term outlook looks bearish. However, investors may have bought the dip for a long-term position. 

However, the company said it would continue investing in Reels and VR platforms as part of its metaverse project.  

Meta Inc. (FB) stock was down 2.13% to US$232.70 at 10:35 am ET on Friday. The stock traded in the range of US$384.33 to US$235.75 in the last 52 weeks. Meta Inc’s market capitalization declined to US$657 billion, as of February 4, from around US$900 billion on Wednesday.

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Finally, the stock market is currently volatile. Hence, investors should exercise due diligence before investing in the stock market.