{"id":9521,"date":"2022-02-03T21:07:06","date_gmt":"2022-02-03T21:07:06","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/03\/meta-formerly-facebook-faces-historic-drop-as-stock-tanks\/"},"modified":"2022-02-03T21:07:06","modified_gmt":"2022-02-03T21:07:06","slug":"meta-formerly-facebook-faces-historic-drop-as-stock-tanks","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/03\/meta-formerly-facebook-faces-historic-drop-as-stock-tanks\/","title":{"rendered":"Meta, formerly Facebook, faces historic drop as stock tanks"},"content":{"rendered":"

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Meta is putting a lot of virtual eggs \u2014 and billions of dollars \u2014 into the metaverse basket, and Wall Street is pretty anxious about it.<\/p>\n

Shares of the company formerly known as Facebook saw a historic plunge Thursday after the social media giant reported a rare profit decline<\/a> due to a sharp rise in expenses, shaky ad revenue growth, competition from TikTok and fewer daily U.S. users on its flagship platform.<\/p>\n

At the same time, it invested more than $10 billion in CEO Mark Zuckerberg’s ambitious plan to transform Meta Platforms Inc.<\/a> into a virtual reality \u2014 actually, make that \u201cmetaverse-based\u201d \u2014 company.<\/p>\n

Meta\u2019s shares fell more than 23% to $246.76 in afternoon trading Thursday, lopping more than $215 billion off the company\u2019s overall value, known as its market capitalization. A drop that big would be the largest ever for a single company on a single day.<\/p>\n

\u201cMeta is sacrificing its core business model for its fascination with the metaverse,” said Rachel Jones, an analyst with the research firm GlobalData. “Betting big on the metaverse isn\u2019t a bad thing \u2014 the technology is set to be huge and provide a multitude of opportunities \u2014 but it will take at least another decade to really get going.\u201d<\/p>\n

While tech companies are accustomed to making big bets on futuristic-sounding ideas that sometimes become reality \u2014 and come with a huge payoff \u2014 Wall Street doesn’t like uncertainty. There’s also the inconvenient fact of Facebook’s continued difficulty<\/a> in dealing with toxic real-world effects<\/a> on its existing platform<\/a>.<\/p>\n

There\u2019s \u201ccontinued concern that Facebook\u2019s past challenges will follow Meta into the metaverse,” said Mike Proulx, research director at Forrester Research. “The company has work to do to convince consumers that Meta\u2019s expression of the metaverse is a good thing,\u201d<\/p>\n

Since Meta took on its new name last fall, the company has been shifting resources and hiring engineers \u2014 including from competitors like Apple and Google \u2014 who can help Zuckerberg realize his vision.<\/p>\n

Think of the metaverse as the internet brought to life, or at least rendered in 3D. Zuckerberg has described it as a \u201cvirtual environment\u201d in which you can immerse yourself instead of just staring at a screen. Theoretically, the metaverse would be a place where people can meet, work and play using virtual reality headsets, augmented reality glasses, smartphone apps or other devices.<\/p>\n

It might sound like science fiction, but then again, not long ago so were computers that fit in your pocket, driverless cars and microwaves that talk to you. Technology barrels ahead whether we like it or not and, to quote a vintage Facebook motivational poster in the company’s headquarters, \u201cfortune favors the bold.\u201d Despite an enormous backlash <\/a> to Facebook’s problems ranging from misinformation and privacy mishaps to teen mental health<\/a> and hate speech, Zuckerberg continues to believe that bold bets to steer the company in new directions have generally paid off.<\/p>\n

In a Wednesday conference call, Zuckerberg said the company’s investments this year will focus on Reels \u2014 a TikTok-esque short form video service on Instagram \u2014 as well as messaging, ads, commerce, privacy, artificial intelligence \u201cand, of course, the metaverse.\u201d<\/p>\n

\u201cMaking meaningful progress across all seven of these areas is going to improve the services we offer today and will help power a social, intuitive, and entertaining metaverse,\u201d he said. But he acknowledged that “this fully realized vision is still a ways off, and although the direction is clear, our path ahead is not perfectly defined.\u201d<\/p>\n

But while Wall Street’s metaverse optimism appears to fall well short off Zuckerberg’s, Meta’s rivals are ramping up their own metaverse projects. This includes Apple, Google and Microsoft, which recently bought the video game company<\/a> Activision Blizzard with the hopes of accelerating its ambitions for the metaverse.<\/p>\n

But it’s not just the big companies. According to app analytics company SensorTower, 86 apps added \u201cmetaverse\u201d to their title or description from November 2021 through January of this year. To date, 552 mobile apps include the term \u201cmetaverse\u201d in their title or description.<\/p>\n

Stifel analyst Mark Kelley sought to calm investors, noting that Zuckerberg outlined not one but seven investment priorities for the company this year. He said he doesn’t think Meta’s initial goal of reaching 1 billion metaverse users is a stretch \u2014 and importantly, he believes only 40% would be gamers, signaling its broader appeal.<\/p>\n

Meta\u2019s stock plunge doesn\u2019t discourage metaverse enthusiast and venture capitalist Matthew Ball, who months before Facebook\u2019s renaming started an index fund of metaverse-related companies. Meta the company is one of the 45 stocks in Ball\u2019s index.<\/p>\n

\u201cMark\u2019s focus on the next-generation internet is actually justified by the fact they can see in their core business that growth is slowing, that users are shifting elsewhere, and in particular, young users are shifting to these virtual and immersive worlds where they\u2019re a small participant and where their investments are focused,\u201d he said.<\/p>\n

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This story has been updated to correct a description of the fall in Meta’s market capitalization. The decline was in the billions of dollars, not millions. \u2014\u2014\u2014<\/p>\n

AP Technology Writer Matt O\u2019Brien contributed to this story.<\/p>\n<\/div>\n