Why And How Meta Lost $230B? The Biggest One Day Stock Wipeout

A historic plunge of a company’s stock price (META) erased more than $230 billion in its market value;

The loss is easily the most significant recorded one-day loss in history for a U.S. company.

The 26.4% wipeout in Meta comes after the company reported a drop in daily users over their last earnings report, following Facebook’s rebranding last year to Meta:

Proving the company is still experiencing difficulties coping with its own pivot to becoming a virtual reality-based company and what this entails for both shareholders and advertisers alike.

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Additionally, Facebook’s advertising model has also been walloped by privacy changes at Apple, which Facebook has said it expects will cost them billions.

The hit Facebook shares took cost their Founder and CEO Mark Zuckerberg about $30-billion dollars in personal wealth.

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How Apple’s New Ad policy Played Leading Role In Meta’s And Other Platforms Losses?

In its ongoing attempts to always evolve, Facebook felt the necessity of updating its status as a community website.

As an effect of this change in perspective, many people gave up on Facebook and slowly abandoned their fan pages or posts. This caused a substantial loss in sales:

The Chief Financial Officer David Wehner was forced to publicly announce they will most likely lose over $10 billion in revenue because of Apple’s newly implemented ad-privacy policy.

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This ad-privacy change restricts businesses and marketers from collecting any data on a user who is not logged into Facebook:

With this policy change, Facebook isn’t the only company impacted:

Snap Inc. (Snapchat) signaled its reservations about the ad restrictions, which lefts its own investors selling out of their positions, resulting in a market downturn.

Spotify dropped nearly 15%. Twitter and Amazon, after both reported quarterly results of the week, dropped 6% and 7%, respectively.

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Why Are The Tech Giants Losing Tens Of Billions Of Dollars?

Investors fear policy tightening from the U.S. Federal Reserve after ultra-low interest rates have driven valuations of some big U.S. technology firms. As rates and policies change, companies attempt to fend off mounting disruptive competition and fines over privacy concerns:

Major tech firms like Apple, which float at lofty valuations, have become more susceptible to market volatility. As a result, tech giants often lose sums of tens of billions of dollars – sometimes, even more than that.

In 2020, Apple saw a sell-off value of $180bn on the 3rd of September. Similarly, Microsoft experienced a 26% pullback just two weeks later.

However, Microsoft then saw an 11.6% increase by the end of March:

Maybe Meta’s stock drop is a good reminder that software can be as volatile as tech.