In October of 2021, Facebook renamed its company name to Meta, highlighting the fact that, from thereon, the company’s primary focus would be on building the metaverse & not just being limited to being a social networking platform. Shares of Facebook’s parent company, Meta, were almost down to 25% due to the recent quarterly report showing a decline in revenue & falling short of profit expectations.
Meta’s Bloodbath in the Stock Market
The stock price of Meta got battered mercilessly by Wall Street and it was almost on the verge of slipping out of the Top 20 US stocks in the market. The META shares tanked almost 25% on Thursday & are now trading at $97.94 at the time of writing. The situation has worsened so much that it’s shrinking in size compared to companies like Chevron and Procter & Gamble.
The quarterly report further led to the de-rating of the Meta stock by industry analysts like KeyBanc & Morgan Stanley. “We typically don’t like ‘night-of’ rating changes as they can be reactionary,” says Morgan Stanley’s Brian Nowak. “But we think META’s latest results and forward capex guidance are thesis changing and likely to weigh on the shares for some period.”
Factors Impacting Meta’s Growth
Numerous reasons are impacting the growth factors at Facebook – be it stiff competition from rivals like TikTok or privacy issues that have plagued the company for years. Their recent foray into the metaverse has also met with a lot of skepticism as investors have said, it is an experimental bet which is causing “supersized and terrifying losses.” Thus, Mark has been urged to spend less on the metaverse project by his investors in order to trim down the losses.
Mark Zuckerberg’s Stance Remain Unchanged
However, Zuckerberg on the other hand claims that the company would be making a mistake if it doesn’t pay attention to products that would finally lead the future.
“The internal indications I’ve seen suggests we’re doing leading work, and are on the right track with these investments, so I think that we should keep investing heavily in these areas.”
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