Shulou(Shulou.com)11/24 Report--

According to the news on October 28, at the beginning of last year, the market capitalization of Meta, the parent company of Facebook, exceeded 1 trillion US dollars and entered the trillion dollar market capitalization club. In just one year, however, the company lost more than $730 billion in market value and even fell off the list of the most valuable TOP20 companies in the United States. Clearly, investors are paying a high price for Meta's meta-universe vision.

Meta just reported third-quarter results that fell short of market expectations, sending its shares tumbling 25% on Thursday, the biggest one-day drop since February. Meta has lost 70% of its market value so far this year and is down 74% from its peak in September 2021, with a market value loss of more than $730 billion.

At the beginning of this year, Meta was still the sixth largest company in the United States by market capitalization, with a market capitalization of nearly $1 trillion. Just 10 months later, the company's shares are now worth about $260 billion, ranking 27th in the world. Its market capitalization is now half that of Berkshire Hathaway, less than UnitedHealth, Chevron, Eli Lilly, Procter & Gamble, Bank of America and Aberdeen.

Meta, once the darling of Wall Street, is losing its popularity with brokerages. At least three investment banks downgraded the stock, including Morgan Stanley, Cowen and KeyBanc Capital Markets, after the company reported disappointing quarterly revenue forecasts.

Mandeep Singh, an analyst at Bloomberg Intelligence, said: "despite a sharp slowdown in expected revenue growth, Meta's investment in long-term projects is still too aggressive. The company's forecasts for operating and capital expenditure in 2023 are surprising because so far the company's virtual reality (VR) efforts have been unattractive."

While Thursday's plunge in Meta shares was eye-popping, it still pales in comparison to the record plunge in February. At the time, the stock plummeted about 26%, wiping out about $251 billion in market value because of poor earnings. This is the biggest one-day decline in the market capitalization of American companies in history.

The stock's decline this year has attracted the attention of value investors, who usually buy hard-hit stocks because they expect things to improve. But there is no sign that these bets will pay off anytime soon.

A year ago, Meta announced that it would invest in VR and changed its name from Facebook to Meta. The company said on Wednesday that it expects to spend between $85 billion and $87 billion this year. In 2023, that figure is expected to grow to $96 billion to $101 billion. 'This is a big negative because investors want Meta to cut costs significantly, 'said Neil Campling, an analyst at Mirabaud Securities.

Camplin is not optimistic about the future of Meta. He thinks Meta is like the IBM abandoned by the times in 2005. "it's like IBM symbolizing the risk of becoming the next generation of fossils in Dinosaur Technology 1.0."

The collapse of Meta's share price is reminiscent of the days when the dotcom bubble burst, but the losses are much greater in terms of the value of individual companies. The decline in Meta shares began at the end of last year, when the economy began to show signs of weakness and accelerated in early 2022. At the time, Meta said Apple's privacy policy change to iOS would result in a $10 billion loss of revenue this year.

Mark Zuckerberg, founder and chief executive of Meta, seems to be powerless about it, and things seem to be getting worse. Since the company changed its name a year ago, Zuckerberg has repeatedly said that the future of Meta is a meta-universe. But investors simply see it as a tens of billions of dollars pit, and its core advertising business is shrinking. Meta expects fourth-quarter revenue to decline for the third consecutive quarter.

The other four technology companies with market capitalization above the trillion-dollar mark remain strong, while Apple, Microsoft, Google and Amazon remain the four most valuable companies in the United States, although they have been hit as hard as others this year.

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