Meta lost $240 billion of its valuation in one afternoon. Here's what really happened
When Meta announced $10 billion in losses while building the metaverse in its latest earnings call, the fallout of the information was something nobody would have dreamt of. As soon as stock markets opened on Thursday, the value of Meta shares fell mora than 26 percent shaving off $240 billion of the company's value in just one afternoon, Fortune reported.
Never did Mark Zuckerberg say that building the metaverse would be easy or quick. He was anticipating the challenge would be tough and even successfully poached some 100 engineers from Apple. Reality Labs, tasked with building the metaverse reported a quintupling of its revenue from three years ago, even as it posted a loss of a little over $10 billion while building Zuckerberg's vision of the metaverse. While the losses were anticipated, the disapproval from investors, in just a few months after the company pivoted to the metaverse, is quite the shock.
On Thursday, Meta stock plummeted from $323 to $237 at the day's dropping its valuation from nearly $900 billion to $661 billion in just a matter of hours, Business Insider reported. This is the biggest wipeout in U.S. corporate history, overshadowing Meta's own collapse in July 2018, when the company, then known as Facebook, dropped $119 billion in valuation.
Adding to the company's woes has been the first-ever drop in the total number of its users since it started operations. Fortune also reported that Meta's daily active user numbers stood at 1.93 billion as against investor expectations of 1.95 billion sparking fears if the company had reached saturation in its markets.
The metaverse would be one way, the company could add more users in the future, but Meta, even with its deep pockets, needs to make a compelling case for spending billions building it to bring its investors on board with its vision. For now, it does appear that Facebook rushed its rebranding to Meta to paper over concerns raised by whistleblowers and distance its products from the negative publicity that they were receiving them.
The drop in valuation has also affected Zuckerberg as his personal worth dropped by $31 billion pushing him to 10th place in the Bloomberg Billionaires Index, after a year that has been really good for Big Tech firms. Google's parent company, Alphabet recently announced a 20-for-1 stock split after its shares have been hovering around the $2,800 mark since October last year.
How will Zuckerberg's pivot pan out in the company's favor will be interesting to see in the months to come.