Meta stock plunged during a disastrous Thursday in which it lost almost a quarter of its value after a disappointing earrings report that missed analyst expectations and lowed guidance going forward. By the close Thursday the stock had fallen 24.56%, from $129.87 to $97.94, the lowest closing price for the stock since 2016.
The report added to concerns analysts have had about the company’s investment in the virtual reality Metaverse it is developing, as well as a perception the company has lost its urgency, and is wasting effort on a myriad of projects which may never produce profits. Additionally the macroeconomic environment, and the headwinds buffeting all of Big Tech have added to the concerns over the company’s future prospects. However some analysts think the company still has hope.
MKM Partners Managing Director Rohit Kulkarni said in an interview, “There is also a messaging problem here. They’re making progress versus Apple and TikTok and they’re getting hit on macro as well as metaverse.”
Meta changed its name a year ago, as it shifted its development focus to the Metaverse, a virtual reality environment advocates see as the future of the internet, were businesses can organize virtual meetings, and consumers can escape into for entertainment that would only be limited by the imaginations of the developers who create it.
The division of Meta responsible for developing the Metaverse, Reality Labs, has been losing massive amounts of money, however, with the latest report showing a loss of $3.7 billion in the previous quarter, up from $2.6 billion in the last quarter.
Forrester VP and Research Director Mike Proulx noted in an interview, “With regards to the metaverse, Zuckerberg has been clear that it’s a long term play but Horizon Worlds right now is a virtual ghost town, especially compared to other 3D immersive platforms like Roblox.”
This is feeding a perception among analysts that Mark Zuckerberg is focusing on all the wrong things going forward. Needham analyst Laura Martin said in an interview, “Nothing they spoke about yesterday actually is the business that today is worth $300 billion market cap. It’s almost like [Mark Zuckerberg] has walked away from the core business that’s historically made all the money.”
Of course among the hardest hit has been Mark Zuckerberg. Worth $142 billion in September of 2021, his net worth has fallen over $100 billion to a present net worth of only $37 billion.
