In Biggest One-Day Drop in US History, Why Facebook Parent Meta Loses $230b?

With more than 2.80 billion monthly active users, Facebook is the world's largest social media platform, however, big losses and sharp criticism during the last few years were inevitable.

Facebook is suffered another blow this Friday, February 4, 2022, where calls for users to remove the social media platform went viral on Twitter, Euronews reported.

This comes after the holding company that owns Facebook, Instagram, and also WhatsApp, Meta, said on Wednesday, February 2, 2022, that Facebook lost around half a million users in the last three months of 2021, and this was the first time in its 18 year history.

As a result, Meta’s stock price plunged more 26 percent on Thursday, February 3, 2022, “wiping out $230bn (€200 billion) in its market value,” according to the same source.

 

One-Day Wipeout

After the “Delete Facebook” campaign on Twitter, the world’s largest social media platform is losing roughly half a million of its users this week.

Bloomberg reported that “Meta CEO Mark Zuckerberg could see $24 billion (€21 billion) erased from his personal fortune due to the stock drop.”

However, the chief executive officer lost, on Thursday, $29 billion in net worth because of Meta Platforms’ record one-day plunge.

Meta's plunge was 26%, to erase more than $200 billion in “the biggest ever single-day market value wipeout for a U.S. company.”

Zuckerberg has about 12.8% of the tech behemoth that was previously known as Facebook.

Bezos, the world's third richest man and Amazon’s founder, holds nearly 9.9% of the company, according to Refinitiv data.

Bezos' net worth rose to $177 billion in 2021 compared to 2020, largely from Amazon's boom during the pandemic as people were extremely dependent on online shopping.

On the other hand, Meta blamed the weakness of the forecast on inflation and supply-chain disruptions that indirectly impact advertisers' budgets, Euronews said.

The company also said that the relapses it is facing resulted from Apple's privacy changes in its iOS, increasing competition between competitors like TikTok.

“People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly,” CEO Mark Zuckerberg told AFP News.

 

A Significant Lack of Trust

Zuckerberg said, “the firm's sales growth had been hurt as audiences, especially younger users, had left for rivals,” New York Post quoted.

Facebook users’ drop was also due to the significant lack of trust in the social media platform since the Cambridge Analytica crisis.

Recent whistleblower leaks from former Facebook employee Francis Haugen exposed the company's failure in combating misinformation and abuse.

Analyst Adam Sarhan from 50 Park Investment, said that “it's the first time the user base is shrinking, and if the company is not growing, then it's a complete reset for investors.”

Despite big technology and communications companies’ important role in driving gains for the broader market throughout the pandemic and much of the recovery in 2021, "the market seems to have shifted," said Brad McMillan, chief investment officer for Commonwealth Financial Network.

He added that “there’s a general sense that what’s been moving the market higher is not going to take us to the next level.”

“The question is where is the next growth engine coming from?” McMillan noted.

According to the New York Post, Zuckerberg seems to be optimistic, telling shareholders: “Last year was about putting a stake in the ground for where we are heading; this year is going to be about executing.”

 

Censorship

The Israeli occupation forces detained more than 390 Palestinians and exposed them to interrogation, because of highlighting Palestinian issues and Israeli crimes on Facebook, as reported by the annual statistics released by the Sada Social.

While monitoring Facebook, a Palestinian voluntary group has raised an alarm to warn that the social media platform was more and more blocking and repressing the content posted by Palestinian activists and influencers.

Focusing on the Sheikh Jarrah neighborhood and Gaza Strip issues, Facebook had recently limited the reach of the accounts of the Palestinian influencers in an attempt to silent Palestinian voices.

According to the same group, this was another proof to strongly condemn Facebook of censorship and bias against Palestinians, as the US company had banned the users from reaching the hashtag “Al-Aqsa" in 2021, as several activists were posting and commenting about the events happening in Palestine, according to Sada Social’s statistics.

“Facebook and Instagram had blocked as many as 1,500 posts in 2021, almost 44% of posts were posted by journalists and authentic media institutions,” said Iyad Refai, a social media specialist and the director of Sada Social.

It is worth noting that trading in technology stocks is still unstable where investors grapple to price in the impact of high inflation and an expected rise in interest rates.

However, while Zuckerberg's wealth is still on paper, Meta shares could very well recover sooner rather than later.