Shareholders of Meta Platforms Inc. (META stock) are suffering greatly as a result of its metaverse investments: The market value of the parent company of Facebook has plummeted by a staggering $677 billion this year, knocking it out of the top 20 global corporations.
META Stock Decline
There are no indications that the punishment will soon lessen. After frightening investors with rising costs to fund their version of virtual reality and a drop in sales, Meta stock (NASDAQ: META) is down as much as 25%.
At the beginning of the year, Meta was the sixth-largest US corporation by market capitalization and was just shy of having a $1 trillion market value. In ten months, the stock will have grown to a value of around $258 billion, placing it 26th overall. Currently, it has a lower market worth than organizations like Chevron Corp., Eli Lilly & Co., and Procter & Gamble Co.
Meta, once beloved by Wall Street, is increasingly losing popularity with brokerages. After the business provided a dismal quarterly revenue projection, at least three investment banks—Morgan Stanley, Cowen, and KeyBanc Capital Markets—cut their ratings on the shares.
Despite a severe slowdown in anticipated revenue growth, “Meta is excessively aggressive with its investments in long-term initiatives,” according to Mandeep Singh, a Bloomberg Intelligence analyst. Given the lack of success thus far with its metaverse efforts, the company’s opex and capex view for 2023 is unexpected.
Even if Thursday’s premarket decline is a significant development, it is nothing compared to the stock’s record-breaking collapse in February, when it fell 26% in the wake of dismal earnings news and lost roughly $251 billion in market value. The largest market value loss for a US corporation has ever occurred.
Value investors, who purchase beaten-down equities in anticipation of a rebound, have been drawn to the stock’s slide this year. But there’s little indication that those wagers will succeed any time soon.
A year ago, Meta Platforms (NASDAQ: META) announced a change in focus from traditional investments to virtual reality, as well as a name change from Facebook Inc. to Meta Platforms. The business stated on Wednesday that it anticipates its overall expenses for this year to range between $85 billion and $87 billion.
This amount is projected to increase to between $96 and $101 billion in 2023. According to Neil Campling, an analyst at Mirabaud Securities, that is the major drawback given that investors were hoped Meta would make significant cost reductions.
According to Bloomberg data, the company’s quarterly capital expenditure exceeded what all but 16 of the S&P 500 companies spent on capital during the entire previous year.
Featured Image- Unsplash @ Dima Solomin
Author Valerie Remorosa 
