International: (Finance) Facebook parent Meta's stock erased more than US$200 billion, 26.4 per cent in market value in a single day. What was the trigger and what does the future hold for Facebook?
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.
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.
WHAT WAS THE TRIGGER?
Meta saw investors flee on Thursday after the tech giant issued a dismal forecast, blaming Apple's privacy changes and increased competition.
In reporting fourth-quarter results late Wednesday, Meta forecast weak guidance for the March quarter, saying it expected first-quarter revenue in the range of US$27 billion to US$29 billion. Analysts were expecting US$30.15 billion, according to IBES data from Refinitiv.
Facebook saw its user numbers drop for the first time in its 18-year history last quarter, falling by about half a million to 1.929 billion daily active users.
Research firm Insider Intelligence has also said it expects Instagram's growth in monthly users to fall to 5.8 per cent this year and 3.1 per cent by 2025, from 16.5 per cent last year.
In Meta's earnings call, Zuckerberg said competition for users was one factor impacting the business, mentioning short video app TikTok by name, owned by ByteDance LTD.
With many choosing to opt out, this translates into less user data for the platform and in turn impacts targeted ads, one of Facebook's main sources of income.
Another change that Meta said would hit its bottom line was Apple's privacy changes to its iOS operating system. The changes require apps such as Facebook to ask users for explicit permission to track their activities “across other companies’ apps and websites”.
Meta's chief financial officer, Dave Wehner, told analysts on a conference call that the impact of Apple's privacy changes could be "in the order of US$10 billion" for 2022.
"So, that is a pretty significant headwind for our business," he said.
