Facebook’s market cap tumbles to nearly $700 billion

The company’s fourth-quarter profits of $3.67 per share dropped short of the $3.85 that analysts had expected

Investors gave Meta CEO Mark Zuckerberg’s grandiose plans to create a metaverse, a digital world accessible through virtual reality, a big vote of disapproval on Wednesday.

Shares in the company formerly known as Facebook tanked 23% in after-hours trading on Wednesday to $249.15 after the social media giant reported tepid quarterly results. The huge drop swept nearly $200 billion in market value from Meta, sending its total market capitalization from $900 billion tumbling to nearly $700 billion.

The company’s fourth-quarter profits of $3.67 per share dropped short of the $3.85 that analysts had expected. Revenues of $33.67 billion were roughly in line with Wall Street’s forecasts.

Meta’s 1.93 billion daily active users in its fourth quarter missed analyst expectations of 1.95 billion. That figure was also slightly less than the number of daily users it recorded the previous quarter, marking the first time the company experienced a drop in users in its history.

In terms of the future, Meta projected $27 billion to $29 billion in sales for its upcoming quarter, below the $30.15 billion that analysts had expected.

Executives blamed the disappointing results on several factors, including Apple’s privacy changes to iOS that made targeting ads to users more difficult and supply chain disruptions that are causing advertisers to spend less. The problems are unlikely to be resolved anytime soon.

Meta also said it spent an astonishing $10 billion in 2021 on projects related to the metaverse, which is far from bringing in any substantial revenue. The company has predicted that people will use the metaverse in the future and that big spending now in preparation will give Meta a head start over rivals.

Still, Zuckerberg has yet to make a compelling business case to investors about why his company should spend so much on the metaverse when its current business suffers from slow growth, privacy issues, and a weak ad market. The latest earnings only add to the complications.

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