Meta Platforms (NASDAQ:META) shares nosedived 25% Thursday -- sliding below $100 a share and finding their lowest point since 2015 -- as investors showed nothing but negativity following what could only be called a grim quarterly report and outlook for the social-media giant.
Meta stock (META) closed down 24.6%, easily the biggest decliner in the S&P 500.
On Wednesday, the Facebook (META) parent reported results that edged past revenue expectations, but warned of sales challenges and missed profit forecasts heading into 2023.
As Wall Street battered Meta (META), the company's shares were on the verge of slipping out of the top 20 U.S. stocks losing a staggering $677B in value so far this year.
Now it's shrinking smaller than companies like Chevron and Procter & Gamble, and worth less than $290B and out of the top 20.
The report brought downgrades from analysts, including KeyBanc and Morgan Stanley moving to the sidelines; in Morgan Stanley's case, it was the first time it downgraded the stock.
"We typically don’t like 'night-of' ratings changes as they can be reactionary," says Morgan Stanley's Brian Nowak. "But we think META’s latest results and forward capex guidance are thesis changing and likely to weigh on the shares for some period."
Updated 10:06 a.m.: Meta's nosedive is proving a drag on the Nasdaq (down 0.7%), and while not all Tech stocks are caught in the downdraft, Internet Content and Information names certainly are: Alphabet is down again - (GOOG) -2.4%, (GOOGL) -2% - as are Spotify (SPOT) -3.7%, Pinterest (PINS) -2%, Snap (SNAP) -1.2%, and Chinese media names including Baidu (BIDU) -2.7%, NetEase (NTES) -2.7%, iQiyi (IQ) -5.2% and Tencent Music (TME) -1.8%.
Coming into focus among Thursday morning reactions are some thwarted expectations of reining in expenses. Investor Brad Gerstner called on the company to limit spending on its metaverse/Reality Labs unit to $5B per year at most, but Meta's earnings call made clear that billions more in investment were coming in 2023. The company clarified that 2022 total expenses would land between $85B and $87B, and 2023's would rise to $96B-$101B.
"The internal indications I've seen suggests we're doing leading work, and are on the right track with these investments, so I think that we should keep investing heavily in these areas," Zuckerberg said.