Why is Facebook Stock Down So Much?
If you’ve been wondering why is Facebook stock down, you’re not alone. There are many reasons why the stock has plummeted. The price has dropped even after the company announced its earnings and annual results were positive. The company’s revenue grew, and profits were higher than expected. While no one has a crystal ball, investors make trading decisions based on what they think will happen in the future.
Why is Facebook stock down? – Facebook Stock Down
One of the reasons for Facebook stock’s recent drop is the company’s disappointing earnings report. Though the company’s annual results were positive, earnings were lower than analysts’ expectations. Facebook also faces competition from Snap Inc., which has negative operating margins and Pinterest Inc., which has revenue growth but lacks gross margins. However, it’s important to note that analysts are not crystal ball gazers and are only based on past performance.
The company has faced international consequences following its privacy scandal. It was recently sued in a British court for violating the privacy rights of 44 million U.K. users. In addition, Snap lowered its quarterly earnings forecast citing a deteriorating macroeconomic environment. Its shares have plunged 40% at the time of writing, on track for the largest intraday fall in the company’s history.
The Wall Street Journal is publishing a series on Facebook’s problems, and it could affect the stock. The company has already lost $36 billion in market capitalization, a decline of nearly three percent in three days. Today, the stock is down just 2.1%. If you’re curious about the reasons behind Facebook’s plunge, read on.
New rules on the use of customer data may have affected Facebook’s near-term growth. These rules may have cost Meta billions of dollars. Additionally, India’s telecom providers announced a 25 percent hike on prepaid data packages, which hit the company’s user growth in the country. As a result, the stock will likely bounce back in the second half of 2022.
While Facebook has recently broken records, it is still a young company. In 2008, Mark Zuckerberg became the youngest self-made billionaire. Despite these high-profile milestones, the company’s stock opened down 24% on Thursday after an embarrassing earnings call. The fall in Facebook’s market cap erased more than $200 billion from the company’s value.
Why is facebook stock down so much? – Facebook Stock Down
The stock is down by more than 20% on Thursday, the worst decline since 2012. The drop wiped out nearly $230 billion in value, an amount equal to the entire value of the stock market on Black Tuesday in 1929. Facebook is also vulnerable to changes in investor sentiment. The stock was last down in March 2018, when news broke of the Cambridge Analytica scandal. The company quickly recovered. However, investors are still wary of its future.
Recent reports have suggested the social network is struggling to remain profitable, despite the fact that its revenue has doubled. The company reported its first-ever drop in daily active users, announcing a weaker revenue outlook for the fourth quarter. In addition, Apple’s new restrictions on its apps will cost the company $10 billion this year. Combined, these issues pose a perfect storm for Facebook.
The company’s recent guidance suggests that it will only generate three to eleven percent year-over-year revenue growth in the first quarter of 2022. This will not generate the cash flow needed for new projects. In addition, Facebook has $48 billion in cash on its balance sheet. However, building a new company focused on the metaverse presents a massive risk-reward scenario.
Why is facebook stock down after hours? – Facebook Stock Down
The stock has fallen dramatically in recent days following a disappointing earnings report. It’s impacted other social media companies as well. Meta Platforms shares closed 26% lower on Thursday, marking the biggest one-day drop ever. This week, the company reported that it will report a drop in daily active users and its first decline in quarterly revenue. The company’s stock has fallen more than 45% from its peak. This slump has knocked it out of the top 10 largest global companies by market value.
But despite these setbacks, investors are not abandoning the stock market or tech stocks. In fact, Amazon stock jumped 15 percent after Facebook’s plunge. The reason may be the company’s latest earnings report. Its quarterly profit doubled from the previous quarter, and analysts are not giving up on it just yet.
Another reason why Facebook stock is down is that the company’s quarterly report missed expectations. The company also released a weak forecast. And the news didn’t stop there: PayPal ditched its target of 750 million users. Meanwhile, Spotify released a disappointing subscriber growth forecast. The news sent Facebook shares tumbling, but they have recovered. The company’s earnings report was released before the market closed.
The company is trying to pivot to virtual reality and metaverse technology. It recently said it expects Q1 2022 revenue of $27 billion to $30 billion, but Wall Street was expecting closer to $30 billion. It’s also investing $10 billion in its new venture, Reality Labs. It isn’t sure how that will pan out, but it’s worth watching.
Why is facebook stock dropping 2021?
The social giant formerly known as Facebook is having a bad quarter. The parent company, Meta Platforms, reported lower-than-expected profit and user growth for the fourth quarter of 2021. It also forecast revenue declines in the current quarter. In response, Meta stock plunged nearly 20% and its market cap fell to $661 billion from $898.5 billion early Thursday.
The recent fall in Facebook shares comes on the heels of a Wall Street Journal investigation on Facebook’s controversial XCheck program. This program allows “VIP” Facebook users to post whatever they want. The paper found that this program has been used by human traffickers and armed groups to lure victims and spread hate.
While Meta shares rallied for two weeks after Facebook’s parent hit bottom, Facebook’s outlook is still cloudy. Although Meta has always been a good investment, Facebook has not fared well in the last year. The company has taken an outsized share of the growth in online advertising, a sector that is facing a slump due to the slowdown and competition from TikTok.
The news about the Facebook meltdown has prompted investors to rethink their strategies and look at companies more carefully. The company’s recent ad tracking change is hurting its numbers, while Google’s ad business has been booming. In addition to this, Amazon has a $31 billion annual ad business, which grew 30% in the past year. Furthermore, its cloud computing business is booming.
Why is facebook stock dropping today? – Facebook Stock Down
Facebook is suffering a setback. The social network is experiencing flatlining user growth and is facing a change in investor sentiment. The company has recently issued revenue guidance for Q1 2022 of $27 billion to $29 billion, less than what Wall Street expected. This drop may not be an isolated event.
The company’s stock is dropping because of the recent downgrade. Its parent company, Meta Platforms, said that the company’s revenue growth will be weaker than expected next quarter and has seen a fall in daily active users. The company also warned that the privacy changes introduced by Apple are hitting it hard. Last week, the company reported its first quarterly decline in daily active users. The stock closed with its largest one-day drop ever.
In addition, the company’s transition to “Meta Platforms” hasn’t gone smoothly. The stock is down 40% so far this year, and investors are questioning whether the new strategy will be a hit or a miss. A recent drop in the metaverse ETF has also caused investors to wonder if the new strategy will actually pay off in the long run.