Facebook parent Meta saw its stock price plunge more than 20 percent intraday on Oct. 27, amid broader carnage in U.S. tech stocks as investors pulled back amid the impact of soaring inflation on ad spending.
Shares of Meta were down as much as 24 percent on Thursday, trading at around $100, a low not seen since 2016. At its peak, the stock was trading at $382 per share.
The stock plunge sent Meta CEO Mark Zuckerberg’s net worth down by more than $10 billion, according to a Bloomberg estimate.
Meta’s Reality Labs division, which lost more than $9 billion in the first three quarters, showed bigger than expected losses in the third quarter, $3.67 billion versus $3.09 billion expected.
Zuckerberg told investors during an earnings call that Meta is facing a number of headwinds, including a “volatile macroeconomy, increasing competition, ads signal loss, and growing costs from our long-term investments.”
A slowdown in digital advertising is hitting social media companies like Meta hard, with its shares down as much as 60 percent year to date as businesses reduce ad spending amid soaring inflation and recession fears as the Federal Reserve cranks up interest rates.
Zuckerberg, whose personal fortune plunged by around $11 billion in the company’s stock slump, said Meta is behind on where it hoped to be on revenue, but he struck a hopeful note on a fix for the future.
“I believe the tougher prioritization, discipline, and efficiency that we’re driving across the organization will help us navigate the current environment and emerge an even stronger company,” he said.
If Meta’s intraday losses hold at the closing bell, the company will have lost around $78 billion in market value.
The company’s results come a day after Google and Microsoft posted disappointing numbers, sparking a widespread sell-off in tech stocks.
Analysts said investors are concerned because Meta is spending on capital-intensive projects at a time when the ad market, a major source of revenue for the company, is drying up as businesses pull back on spending amid growing signs the economy is faltering.
Meta has projected that Reality Labs’ losses would grow further in 2023 and promised to “pace” investments beyond that.
“Our old swim coach once crudely said, ‘The bad news is you suck, [and] the good news is you can only get better.’ There was some truth to those words, and perhaps the same holds true here,” he told the outlet.
Bernstein cut its Meta price target to $135 from $195. At least 13 brokerages also have cut their price target on Meta stock, with JPMorgan slashing it to a Wall Street low of $115.
