Meta's Stock Plummets After Weak Holiday Quarter Forecast

Meta's Stock Plummets After Weak Holiday Quarter Forecast

Meta Platforms' stock prices plummeted nearly 20% after the company released a disappointing forecast for the holiday quarter, wiping out $67 billion in stock market value. This adds to the over $500 billion loss the company has already incurred this year. The weak outlook has raised investor concerns about Meta's costly metaverse bets and its ability to navigate significant challenges.

Factors Behind the Gloomy Outlook

The disappointing forecast is attributed to several factors, including sluggish global economic growth, intense competition from TikTok, privacy changes by Apple, and regulatory threats. Additionally, Meta's heavy spending on metaverse projects has sparked investor skepticism, despite the company's efforts to overhaul its apps and ad products to maintain profitability.

Financial Outlook and Investments

Meta expects its Reality Labs unit, responsible for metaverse investments, to grow in 2023. The company also announced that its total expenses for 2023 could range between $96 billion and $101 billion, significantly higher than the revised 2022 estimates of $85 billion to $87 billion. Meta has pledged to "pace" its investments after 2023, signaling a potential shift in strategy.

The stock rout, which would have been the biggest one-day loss since February 2 if extended to the next trading session, reflects growing investor uncertainty about Meta's direction and ability to justify its metaverse investments.