Elaine Jean Tech 02.04.2022 05:Feb AM EST

Meta, Facebook’s Parent Company, Loses $230 Billion in Biggest One-Day Market Drop for a US Company

The stock price of Meta Platforms, Facebook's parent company, fell more than 26% in Thursday trade (Feb.3), resulting in a market capitalization decline of more than $230 billion.

An unprecedented drop in the stock price of Facebook's parent company contributed to a selloff in other technology stocks on Wall Street, which abruptly broken the market's four-day winning run.

The 26.4% decline for Meta Platforms is now believed to be the most significant one-day loss in the history of a publicly traded U.S. firm.

Because of this, Twitter stocks also decreased and this pattern is also seen with Snap stocks.

Major Stocks Plunge Down

Since Meta is so highly valued, a significant change in its stock price can have a significant impact on the performance of broader market indexes.

According to Fox Business, Chief Financial Officer David Wehner stated that the company expects the Apple policy to cost it more than $10 billion in lost sales for 2022, which is approximately 8% of its total revenue last year.

Meta Platforms Inc. closed down more than 26% in Thursday (Feb.3) trading, resulting in a $230 billion+ loss in market capitalization.

Snapchat's parent company, Snap, had its stock drop by 23.6%, while Pinterest saw its stock fall by 10.3%.

Snap increased its share price by over 60% and Pinterest increased its share price by approximately 20% in after-market trading after both companies reported better-than-expected results.

Amazon stock rose by roughly 15% in after-hours trading after the company reported good Q4 profits despite supply chain difficulties in the quarter.

What Caused Meta's Plunge?

Following Apple's privacy reforms and increased competition from TikTok, Meta's stock dropped when the company anticipated revenue for the upcoming quarter ended up being much lower than analysts' estimates.

In the case of an organization from whom investors have come to expect phenomenal growth, it was a letdown.

Los Angeles Times reported an unusual fall in profit was also recorded by Meta, which attributed it to a significant increase in expenses as it invests in transitioning itself into a virtual reality company.

The market appears to have shifted, according to Brad McMillan, chief investment officer of Commonwealth Financial Network, who noted that big technology and communications companies played a significant role in driving gains for the broader market throughout the pandemic and for much of the recovery in 2021.

What Does This Mean In The Future of the Market?

USA Today reported that, according to Ryan Detrick, who is the chief market strategist for LPL Financial, the social media platform was the driving force behind the trend.

Facebook's earnings were a complete flop, which opened the door for the bears to seize control of the market. This resulted in a sell-first-ask-questions-later strategy for the entire market in response.

Facebook's earnings miss and weaker-than-expected revenue estimate sparked a strong reaction in the stock market, leading some investors to believe that the correction that began in early January will continue for some time.

Volatility is the crucial word here. Last year, investors were spoiled by historically high returns on their investments.

Although the markets are expected to perform well this year, they will also be volatile. Due to concerns about interest rates, midterm elections, and geopolitical developments such as those in Russia and Ukraine, there will very likely be more days like this in the future.

Current Market Prices

According to Yahoo Finance, Meta (FB) stock price today is at $237.76 which is down by 26.9%. With that, Google Finance stated that Twitter stock price is at $34.48 which is down by 5.56% while Amazon stock price is at $2,776 and is down by 7.81%.