Brief - The Hustle

Why did Meta lose $200B+ in value?

Written by Trung T. Phan | Feb 4, 2022 9:35:36 AM

The phrase “Big Tech” commonly refers to Amazon, Apple, Google, Microsoft, and the artist formerly known as Facebook (Meta).

The moniker may have to change: Meta had its biggest one-day drop ever, falling 20%+ and losing $200B+ of market value.

What happened?

The sell-off came after Meta’s latest earnings report, per CNBC:

  • Slowing sales: Meta revenue hit $33.7B in the last quarter but its guidance for Q1 2022 ($27-$29B) was below expectations
  • The Apple effect: New changes to iPhone’s privacy policy will cost Facebook’s ad business an estimated $10B this year

Meanwhile, Facebook’s daily users — 1.93B — declined from the previous period with attention moving to other platforms, namely TikTok.

Can Meta come back?

Nikita Bier — a former Facebook exec whose startup was acquired by the social network — highlights the challenges in a viral Twitter post:

  • High-value users (e.g., US coastal) are leaving Facebook and going to TikTok
  • M&A options are off the table due to antitrust scrutiny
  • Founders are choosing not to work at Meta, which means it can’t build new products

Further, Meta’s big bet on the metaverse…

… will take 10 years to play out

Bier does say that Zuck is the “greatest operator” in the world. He’s also the only founder left running a Big Tech firm, putting him in the driver’s seat — with full control — to pivot the company.

In the meantime, though, Meta (worth ~$670B) may have to be downgraded from “Big Tech.” Why? All the other firms are worth at least $1.4T.