Facebook suffers historic single day loss of $240 bn, hits market
Shares of Facebook owner Meta plummeted 26%, the biggest single-day slide in market value for a US company, after the social media giant issued a dismal forecast, blaming Apple Inc's privacy changes and increased competition.
The huge drop, erasing over $200 billion from Meta's market capitalization and around $29 billion from Chief Executive Officer Mark Zuckerberg's net worth, spilled over to the broader technology sector and dragged the Nasdaq Composite Index lower.
It marked the company's worst one-day loss since its Wall Street debut in 2012.
Meta reported a decline in daily active users from the previous quarter for the first time as competition with rivals like TikTok, the video-sharing platform owned by China's ByteDance, heats up.
Other social media stocks were also hit hard on February 3, including Twitter, Pinterest and Spotify. Spotify has been beset by a row over Covid-19 vaccination misinformation and also released disappointing results.
"The downgrade in the earnings outlook by Meta and other companies took markets by surprise," said Kenneth Broux, a strategist at Societe Generale in London.
"The tech selloff spilt over to broader equity markets this morning, and with the Fed preparing to raise interest pointed rates, we could see more volatility going forward," he said.
According to recent data, meta was a widely held stock by various investor groups, including hedge funds, leaving many funds potentially exposed by the wipe-out in its shares.