Shares of Facebook's parent, Meta Platform Inc. fell sharply to 26% in
trading Thursday (3/2) following its financial report in the fourth quarter
which was quite disappointing.
The fall in shares of the company owned by Mark Zuckerberg is the largest
stock decline that has ever occurred in the history of the American stock
market. In that day alone, Meta's market capitalization evaporated at US$
251.3 trillion.
This isn't the first time Meta's stock has fallen drastically in one day. In
July 2018, the shares of the company, which was previously still called
Fecebook Inc. fell 19% due to slowing user growth. At that time, its market
capitalization immediately evaporated at US$120 billion.
The lack of certainty that these Meta shares will bounce back in the coming
days has made the mood on Wall Street turn gloomy, especially given the
volatility that has gripped the tech sector this year.
The magnitude of Meta's stock collapse illustrates how tech companies have
swelled into giants with unprecedented market power. The market forces are
poised for drama once they stumble.
Meta's market cap as of Wednesday's close was around $900 billion. The
company is part of a group of technology megacaps commonly known as the
faang cohort or America's top five technology stocks, along with Alphabet
Inc., Amazon.com Inc. and Apple Inc.
Within a day, Zuckerberg's wealth disappeared enormously at US $ 29 billion
and at the same time recorded the largest decline in wealth that the world's
billionaires had ever experienced.
Previously, the biggest drop in wealth in an instant was experienced by
Tesla Inc boss, Elon Musk. His fortune evaporated $35 billion in a single
day in November.
Musk has been selling Tesla shares since November. He targets to sell his
10% stake in the electric car maker. The sell-off made Tesla's shares
plummet and so far have not recovered.
Zuckerberg's plunging wealth has dropped him to 12th on Forbes' list of
real-time billionaires, behind Indian business moguls Mukesh Ambani and
Gautam Adani.
Trading in technology stocks was volatile as investors struggled to factor
in the impact of high inflation and expected rate hikes.
Meta shares could recover sooner rather than later, with the hit to
Zuckerberg's fortunes remaining on paper.
Zuckerberg sold $4.47 billion worth of Meta shares last year, before the
2021 tech rout.
The stock sale came as part of a predefined 10b5-1 trading plan, which
executives use to allay concerns about insider trading.
According to analysts, the tough competition now faced from competitors and
the fact that earnings are below expectations have created investor
concerns.
Michael Nathanson, Moffett Nathanson analyst in his research questions
whether this condition is a sign of a new phase towards the next peak for
Facebook or precisely as the final phase of glory.
"This decline is very sharp. As a result, Meta emerged as the main news
holder but not in a good way," he wrote as reported by Bloomberg, Friday
(4/2).
Shares of other social media companies such as Twitter Inc, Snap Inc and
Pinterest Inc also closed lower on Thursday and dragged the Nasdaq Index
down 4.2%, its worst sell-off since September 2020.
