![]() ![]() How did this happen and where will Meta go next? WHAT WAS THE TRIGGER? The fall saw Meta chief executive Mark Zuckerberg's personal net worth plunge by US$29.8 billion - the second-largest single-day loss ever after Tesla CEO Elon Musk's loss of US$35 billion in November last year. Meta's stock slide invoked memories of the bursting tech bubble in 2000, spreading to the wider market and dragging the Nasdaq down 3.7 per cent, its worst day in 17 months. Though the company - which also owns Instagram and WhatsApp - has previously been in trouble over concerns about user privacy as well as its platforms' role in spreading misinformation, Reuters said Thursday marked not just its worst one-day loss ever, but the biggest single-day slide in market value for a US company. This article discussed the declines in big tech and the Meta stock crash.SINGAPORE: Internet giant Meta, the parent company of Facebook, made headlines after its stock tumbled 26.4 per cent on Thursday (Feb 3), erasing more than US$200 billion from its market value. In addition, Meta’s stock has failed to stay above the 50 day moving average (green light below) which is another indicator for a stock that is struggling to maintain a positive trend. Consistent lower highs indicate a downward trend of a stock that is struggling to maintain stability.įurthermore, the high volume on each decline (shown on the red volume bars below) indicates the massive selling pressure on the stock. It can be observed that each attempt to reclaim a high (indicated by the black arrows), has failed, resulting in a lower high. The below graph shows the downward trend of the Meta stock over the past year. The Meta stock crash can also be seen by looking at the stock chart and analyzing the trends. This long term bet has drastically increased yearly expenses with no positive return. The below graph illustrates progressively larger expenses that have exceeded $10B annually starting in 2020. Meta’s Reality Labs is responsible for investments in the metaverse and VR space. These expenses include rapid increase in hiring and investments in long term bets. The Meta stock crash is also attributed to rising expenses over the past several years. Furthermore, when businesses face a tougher economic environment, they pull back spending on expenses such as advertising (Meta’s core business). This update limited the level of ad targeting and personalization for Meta which decreased effectiveness of their ads. In 2021, Apple made privacy changes that required users to opt-in to being tracked. Decreasing revenue has been driven by a decrease in ad spend. In October, Meta announced a 4% revenue decline for a second consecutive quarter. Meta has also seen year over year decreases in their top line revenue. The Meta stock crash is heavily impacted by rising interest rates as interest payments on their debt increases and the economic environment becomes tighter. The Meta stock crash can be attributed to several factors:Īs mentioned above, the increase in interest rates has challenged the economic climate and affected many companies in 2022. Meta’s market cap has gone from over 900B to 270B in the span of roughly a year. Meta’s stock crash began in September of 2021 and has continued well throughout 2022. Below we dive into the reason for the crash and look into some technical analysis to explain the Meta stock crash. ![]() Google and Amazon for example lost their trillion dollar title with recent losses.Īmong big tech, Meta has seen the sharpest decline with their stock price crashing 75% from the peak to the recent November low. The decline in big tech indicates hundreds of billions of dollars in market cap being erased. The below table indicates the stock declines from the peak to recent lows across multiple big tech companies.īig tech companies have dropped significantly from their all time highs. Big tech companies have reacted to stock declines by announcing layoffs and issuing hiring freezes in order to cut down on spending. In a tighter economic climate, companies rush to cut costs and extend their runway in the midst of uncertainty. Furthermore, a tough economic environment leads to businesses cutting costs and consumers reducing discretionary spending. Higher interest rates increase the cost of borrowing money and decrease expected returns. The declines are primarily attributed to higher interest rates as the Federal Reserve attempts to tackle increasing inflation. The below graph indicated the stock declines in big tech during 2022. Stocks have reversed from the 2020 euphoria to a downward trend. This year has been brutal for big tech companies and the financial markets as a whole. Meta is among the tech companies who have seen their stock crash upwards of 70%. ![]() Big tech companies have experienced major stock declines in 2022. ![]()
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