Facebook owner Meta erases $338 billion in value, biggest wipe-out in history

Facebook owner Meta plunged 26 per cent on the back of woeful earnings results on Feb 3, 2022. PHOTO: REUTERS

LONDON (BLOOMBERG) - Meta Platforms' one-day crash now ranks as the worst in stock market history.

The Facebook owner plunged 26 per cent on Thursday (Feb 3) on the back of woeful earnings results, and erased about US$251.3 billion (S$337.8 billion) in market value - about the size of New Zealand's economy.

That is the biggest wipeout in market value for any United States company ever.

It is more than the market value of Nike and surpasses the previous record one-day loss of US$180 billion that Apple suffered on Sept 3, 2020.

Mark Zuckerberg, who owns about 12.8 per cent of Meta, lost US$29 billion as his net worth dropped to US$85 billion.

The sheer size of Meta's collapse illustrates just how tech companies have ballooned in size to become behemoths with unprecedented market power, and the drama that can ensue when they stumble. 

While the stock could certainly bounce back in coming days, especially given the volatility that has gripped the technology sector this year, the mood on Wall Street has turned decidedly bleak on the long-time market darling.

Analysts are pointing to the stiff competition that Meta now faces from rivals and to the fact that revenue was below expectations as causes for concern. Moffett Nathanson analyst Michael Nathanson titled his note Facebook: The Beginning Of The End?

"These cuts run deep," he wrote. The results were "a headline grabber and not in a good way".

The sheer size of Facebook's collapse illustrates just how tech companies have ballooned in size to become behemoths with unprecedented market power, and the drama that can ensue when they stumble.

Pictet Asset Management senior investment adviser Frederic Rollin said: "Lots of US megacaps are priced as growth stocks. They may suffer more in a rising yield environment, especially if growth becomes more questionable."

Truist Securities analyst Youssef Squali wrote that Meta "finds itself in the middle of a perfect storm".

Twitter, Snap and Pinterest all closed lower on Thursday and dragged the Nasdaq Index down 4.2 per cent, its worst sell-off since September 2020. Meta shares rose 1.4 per cent after hours.

Meta's market cap as at Wednesday's close stood at roughly US$900 billion. The company makes up one of the original Faang cohort of tech megacaps -Amazon.com, Apple, Netflix and Google's parent Alphabet.

It is not the first time Meta shares have dropped dramatically. The stock plunged 19 per cent in July 2018 on a slowdown in user growth, translating to a about US$120 billion decline in market capitalisation. At the time, it set the record for the largest-ever loss of value in one day for a US traded company.

"We're hopeful the company kitchen-sinked the outlook," said Susquehanna Financial Group analyst Shyam Patil.

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