Facebook value drops 25% and loses more than $200 billion in worst-ever stock market crash

CEO Mark Zuckerberg’s holding loses tens of billions of dollars overnight

Mark Zuckerberg unveiled Facebook was becoming META in October 2021 (AFP via Getty Images)

Facebook has crashed more than 25 per cent in the worst one-day slump in the history of the stock market.

Parent company Meta reported disappointing results on Wednesday evening, showing that it had failed to grow for the first time ever.

The decline hit founder Mark Zuckerberg personally, with his own holdings losing tens of billions in value overnight.

Worries about the poor results led its price to drop more than 25 per cent when trading opened on Thursday morning, wiping $200 billion from the value of the company in hours.

The previous biggest decline was seen by Apple, in September 2020, when it lost $180 billion from its market value, Bloomberg reported. All of the previous five biggest swings have been seen in tech companies, in part because of their large size: Microsoft, Tesla, Amazon have all experienced similar shocks.

Meta’s previous biggest drop happened in summer 2018, when it was still called Facebook and lost $121 billion from its value in one day.

Tech stocks had already faced headwinds in 2022, as investors expect policy tightening at the U.S. Federal Reserve to erode the industry’s rich valuations following years of ultra-low interest rates. The tech-dominated Nasdaq fell more than 8 per cent in January, its worst monthly drop since the end of 2019.

Meta reported a decline in daily active users from the previous quarter for the first time as competition with rivals like TikTok, the video sharing platform owned by China’s ByteDance, heats up.

Meta said about 3 per cent of worldwide monthly active users in the fourth quarter consisted solely of violating accounts while duplicate accounts may have represented about 11 per cent of usage.

The disappointment over Meta‘s earnings and the subsequent stock fall raised memories of the bursting tech bubble in 2000.

Investors seem to be becoming highly selective after the sector’s record-breaking run in recent months.

According to research firm Vanda, purchases from retail investors in late 2020 and early 2021 were focused on expensive tech, EVs and so-called “meme” stocks. In the past week purchases of large-cap tech have skyrocketed while speculative assets have seen very little demand.

The so-called FAANG group of Facebook, Amazon, Apple , Netflix and Google’s Alphabet has seen around $400 billion in market capitalization wiped off in the opening weeks of 2022 as cheaper segments of the markets become more attractive while central banks taper stimulus.

Other social media stocks were also hit hard in pre-market trading on Thursday, including Twitter, Pinterest and Spotify. Spotify has been beset by a row over COVID vaccination misinformation and also released disappointing results.

Stocks futures for the Nasdaq fell as much as 2.4 per cent on Thursday.

Additional reporting by Reuters