META SETS OFF WORST DECREASE IN NEARLY A YEAR
Company’s loss erased more than $250 billion off its market value
Stocks on Wall Street tumbled Thursday, with Meta, the parent company of Facebook, leading the way with a drop of 26.4 percent, a loss that erased more than $250 billion off its market value.
The losses weighed on the techheavy Nasdaq composite, which fell 3.7 percent. The broader S&P 500 declined about 2.4 percent. It was that index's biggest one-day decline since February 2021.
Meta said Wednesday that changes made last year by Apple that made it harder for apps to track iPhone users' digital habits would cost it about $10 billion in ad revenue this year. The privacy features that Apple added are a blow to advertisers,
who would track consumers' online behavior and use data to target them with pitches for products they might be interested in.
The company's CEO, Mark Zuckerberg, said that it was having trouble competing with TikTok, the
short-video app, and that Facebook lost users globally for the first time. The company spent $10 billion building augmented and virtual reality hardware as it changes its focus to the metaverse, a theoretical vision for the Internet.
Other social media companies slid. Snapchat's parent company Snap sank 23.6 percent and Pinterest lost 10.3 percent. Snap soared 54 percent and Pinterest vaulted 28 percent in after-market trading after each reported better-than-expected results.
“If a company like Facebook comes out saying it has a significant earning die-down, it's going to impact the stock perhaps more than other companies that are more reliant on economic growth,” said Saira Malik, chief investment officer at Nuveen, a global investment manager. “Technology companies are very reliant on their own structural growth drivers, so if those start to go away or fade, it's going to be an issue on the stock.”
The sentiment over Meta’s discouraging earnings went beyond social media companies. Shares of Apple, Microsoft and Google were all lower Thursday.
Amazon fell 7.8 percent but later jumped 18 percent after its earning report. The five biggest tech companies, including Facebook, account for about 20 percent of
the S&P 500’s value, meaning their declines have a stronger effect on the index.
Technology stocks — which have proved sensitive to changing views on interest rates — have already been contending with a selloff since the start of the year. Traders are feeling discouraged to invest in riskier assets, like stocks, because higher interest rates impede the potential for larger returns in the future. The S&P 500 is down about 6.1 percent this year.
Also lower Thursday was Spotify, which tumbled 16.8 percent after the company said it expected subscriber growth to slow in 2022 and said it would “no longer plan to issue annual guidance.” The audio streaming platform said it did not expect the number of premium users to be affected by the controversy over accusations that its most popular personality, Joe Rogan, had used his podcast to spread misinformation about COVID-19 and vaccines.
The sell-off Thursday ended a four-day rebound for stocks, which had been bouncing back from a plunge in January. That drop had more to do with concerns about the economy, and what higher interest rates mean for businesses, consumers and stock investors — as the Federal Reserve gears up to start increasing borrowing costs to cool down inflation.