From ridiculously overrated to troubled.
By Wolf Richter for WOLF STREET.
Despite Friday’s rally, shares of Meta Platforms lost more ground, falling 1.0% to $159.10 at the close, and more after hours, the same price the shares had been at for the first time. times July 13, 2017. Five years of nothing, with a thrilling roller coaster ride in between. Four years and two months older, 10 months younger. Since peaking in September 2021, stocks have plunged 59%.
Meta still doesn’t qualify for my growing list of Imploded stockswhere the minimum requirement is a 70% drop from peak, but he’s working hard to get there (data via YCharts):
The market value plunged from $1.077 trillion in September to $431 billion today. Thus, 647 billion dollars disappeared in 10 months.
It obviously doesn’t matter because the people who bought the shares in the IPO for $38, and thus participated in the biggest tech IPO in US history at the then, were still up 318% at today’s prices, and the stock could drop another 50%, and they’d still make a ton of money. Those who bought in 2021, OK, win some, lose some.
And that drop in market capitalization has caused something else over the past two days: As other stocks have surged, Meta has fallen from the top 10 most valuable companies in the United States to 11th place, behind Visa. (data via Y-Charts):
As of September 2021, Meta, with a market cap of $1.077 trillion, was the fifth most valuable stock by market cap in the United States. Easy come, easy go (data via YCharts):
Despite the summer rally, the Nasdaq composite is still down 23.6% from the November high, and many stocks have slipped, skidded and plunged, which has rearranged the game a bit in the top 11, but has left the first four in the same position.
There are a host of reasons for Meta’s downfall, including the fact that stocks should never have climbed in such a crazy fashion in the first place. But hey, it was the pandemic, the Fed was printing money by the bucketful, Fed interest rates were close to 0% even as inflation had started to rage, and nothing had matter, everything was skyrocketing. To the Moon!
Well, not everything, because at the time I had already documented Imploded stocks since earlier in 2021. But it just took Facebook, I mean Meta, until September before it started the descent.
And there are a host of additional reasons why stocks should have plunged and have plunged, including the first drop in earnings as a public company; a spike in spending; a 35% drop in net income; and the questionable future of Facebook – I mean, does anyone other than baby boomers still use it?
Then there’s Apple’s “Ask app not to track” prompt on iPhones, which reduces Meta’s ability to spy on iPhone users, and therefore significantly reduces Meta’s revenue. Then there’s the slowdown in advertising business in general right now, and probably in the future, and Meta gets most of its revenue from ads.
And there’s a whole bunch of other stuff, including all kinds of legal stuff, like being sued by the Federal Trade Commission this week over Meta’s acquisition of virtual reality company Within Unlimited, which Meta is trying to do what Big Tech always does, which is to buy off any potential or actual competition that gets in the way of total dominance.
In this case, Within Unlimited would stand in the way of Meta’s hoped-for total domination of the metaverse, which I’m too dumb and old-fashioned to even understand, because I like to drink real beer not virtual beer, and be with real friends and not avatars, real life in all its granularity being precious to me, and not replaceable by a helmet, the software of Meta and avatars representing anonymous people with helmets.
Real reality is fine with me, and metaverse virtual reality has no value to me, not even virtual value, and I don’t understand why it would have value to anyone else. And if enough people think that way, it would be a disappointment for Meta.
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