The brutal week for tech stocks continued Thursday as Meta, Facebook’s parent company, shed nearly a quarter of its market value.
The selloff was precipitated by the company’s Wednesday earnings release, which revealed that Meta had experienced its second consecutive quarter of declining revenue against the backdrop of CEO Mark Zuckerberg’s massive investments in virtual reality technologies known collectively as the “metaverse.”
The sharp decline has hit Zuckerberg close to home. A year ago, Zuckerberg’s net worth was estimated at around $142 billion. However, Meta’s lackluster quarterly earnings have shaved off over $90 billion of Zuckerberg’s personal fortune. Zuckerberg went from being the third wealthiest person in the world in May 2020 down to the 23rd because of Meta’s latest slide.
Meta’s woes have been part of a broader tech bruising seen this week as major companies such as Alphabet (Google’s parent company) and Microsoft have reported underwhelming earnings. The latter reported a 14 percent decline in profits stemming from PC licensing revenues drying up.
Alphabet’s stock dropped by over nine percent in its worst single trading day since the pandemic began back in March 2020. The decline was pushed by news that its revenue growth slowed to its lowest level in over two years while YouTube (also owned by Alphabet) reported its first ever advertising sale drop off.
“These companies are really important bellwethers on advertising and on flows of goods and services… If advertising growth is slowing over there, it is adding weight to that fear of an earnings slowdown,” chief investment officer Fahad Kamal of Kleinwort Hambros told the Wall Street Journal.
Zuckerberg has sought to inoculate investors against the company’s underwhelming economic performance by pointing to expected long-term gains.
“I think there’s a number of different products and platforms that we’re building, where we think we’re doing leading work that will become…launching consumer products and then eventually mature products at different cadences, different periods of time over the next five to 10 years,” Zuckerberg said on a Thursday earnings call.
As of Thursday afternoon, Meta was trading on the NASDAQ below the $100 threshold for the first time since nearly 2016.