Shares of Meta, parent of Facebook plunged nearly 27% on the 3rd (local time), causing a big shock to the U.S. stock market, with its market capitalization evaporating $251 billion.
Facebook closed its regular market at $237.76, down 26.39% from the previous trading day.
The plunge in Facebook’s stock price is attributed to a decrease in active users and disappointment in performance, a decrease in advertising due to changes in Apple’s IOS (embedded operating system provided by Apple), and a hasty entry into Metaverse.
Four Major Reasons of Meta Market Capitalization Plunge
$10 billion in advertising losses due to Apple’s IOS change
Accordingly, JP Morgan analyst Doug Anmuth lowered Facebook’s investment rating from purchase to neutral.
While advertising growth is slowing significantly, Facebook is beginning to shift to expensive and uncertain Metaverse, Nmus said in a report.
In particular, he added, “Facebook will lose about $10 billion in advertising alone due to Apple’s personal information protection IOS change.”
Hasty entry into Metaverse
Experts say it is also hasty for Facebook to enter the Metaverse business (a three-dimensional virtual world where social, economic, and cultural activities such as the real world take place). Facebook is not yet in the stage of building a metaverse.
Facebook is rushing to enter the business by changing its name to “Meta platform” to enter the metaverse business. However, experts believe Facebook is not ready yet and lacks the financial power to handle large-scale investments.
For this reason, Facebook plunged nearly 27% that day, and NASDAQ also plunged nearly 4%.
