The shares of Meta, the company formerly known as Facebook, saw a historic plunge on Thursday after the social media giant reported a rare profit decline.
Meta's share value fell more than 26 per cent to $237.76 on Thursday afternoon, wiping out over $230 billion from the company's market capitalisation. This marked the largest single-day decline for a company. Meta's fall eclipsed the $180 billion lost by Apple in September 2020.
The fall in Meta's value eliminated about 0.9 per cent of the Nasdaq's value and the S&P 500's combined worth by 0.5 per cent. “The exchanges, respectively, suffered their worst daily falls since September 2020 and February 2021,” Reuters reported.
The fall was attributed to a sharp rise in costs and a weak revenue forecast. While Meta is investing heavily on its 'Metaverse' project, it still relies on advertising revenue for its income.
“Meta invested more than $10 billion in its Reality Labs segment—which includes its virtual reality headsets and augmented reality technology—in 2021, contributing to the quarter’s profit decline. It expanded its workforce by 23%, ending the year with 71,970 employees, mostly in technical roles,” Associated Press reported.
Facebook has seen a drop in users in North America and also rising competition from platforms such as TikTok. Moreover, privacy changes by Apple have made it harder for Meta and similar companies to track users for advertising purposes.
