Meta is putting a lot of virtual eggs – and billions of dollars – into the metaverse basket, and Wall Street is pretty anxious about it.
Shares of the company formerly known as Facebook saw a historic plunge Thursday after the social media giant reported a rare profit decline due to a sharp rise in expenses, shaky ad revenue growth, competition from TikTok and fewer daily U.S. users on its flagship platform.
At the same time, it invested more than $10 billion in CEO Mark Zuckerberg’s ambitious plan to transform Meta Platforms Inc. into a virtual reality – actually, make that “metaverse-based” – company.
Meta’s shares fell more than 26% to $237.76 in afternoon trading Thursday, lopping more than $230 billion off the company’s overall value, or market capitalization. That’s the largest single-day decline for a company on record.
“Meta is sacrificing its core business model for its fascination with the metaverse,” said Rachel Jones, an analyst with the research firm GlobalData. “Betting big on the metaverse isn’t a bad thing – the technology is set to be huge and provide a multitude of opportunities – but it will take at least another decade to really get going.”