Meta, formerly Facebook, faces record slump as its price plummets

Wall Street is concerned because Meta is putting a lot of virtual eggs — and billions of dollars — into the metaverse basket.

The corporation formerly known as Facebook revealed a rare earnings decline on Thursday, owing to a significant increase in spending, weak ad revenue growth, competition from TikTok, and fewer daily US users on its flagship platform.

Simultaneously, it put more than $10 billion into CEO Mark Zuckerberg’s grandiose goal to turn Meta Platforms Inc. into a virtual reality — or, to put it another way, “metaverse-based” — corporation.

In afternoon trading on Thursday, Meta’s shares plunged more than 26 percent to $237.76, slashing the company’s whole value, or market capitalization, by more than $230 billion. That’s the biggest one-day drop in a company’s history.

“For its preoccupation with the metaverse, Meta is compromising its basic business model,” said Rachel Jones, an analyst with the research firm GlobalData. “Beingt big on the metaverse isn’t a bad thing – the technology is set to be massive and bring a plethora of options — but it will take at least another decade to get rolling.”