MASSIVE BOMBSHELL: Meta Stock Got Crushed By A Massive 50%, Facebook Just Crashed The Stock Market.

Meta Platforms Inc.’s one-day crash may rank as the worst in stock-market history.

The Facebook parent plunged 22% in early U.S. trading on the back of poor earnings results, putting it on track to erase about $195 billion.

At current levels, that’s the biggest collapse in market value for any U.S. company. But there’s no certainty the losses will hold, especially given the recent volatility that’s whipped across technology shares. Markets have swung wildly in recent weeks, with buy-the-dip traders sometimes storming in during the final hours of the trading day.

However, investors were displeased with more of what Meta had to say. Net income fell 8% for the quarter to $10.3 billion, and that led to earnings of $3.67 per share, down 5% year over year. Meta also failed to keep up the pace of growth in its key user metrics. Daily active users rose just 5% from 12 months ago to 1.93 billion, and monthly active users posted only a 4% gain to 2.91 billion. Similar figures using Meta's "active people" definition showed only slightly better single-digit percentage growth from year-ago levels.

Moreover, the first-quarter outlook showed continued weakness in growth rates that disappointed Meta's shareholders. Revenue projections for $27 billion to $29 billion would imply growth of only 3% to 11% from the first quarter of 2021, and the company pointed to increased competition for engagement and changes in the Apple iOS that will hurt pricing. Also, Meta passed along comments from some of its advertising clients that macroeconomic challenges like inflation and supply chain disruptions are causing them to cut back on their marketing spending.

Unattainable expectations
The reaction to Meta's earnings report showed just how much most traders emphasize short-term results. For a company the size of the social media giant, annual sales gains of 37% and a 36% rise in annual earnings to $13.77 per share are quite remarkable. They point to the unique factors that proved so useful for Meta over the past couple of years.

Yet now, as growth inevitably slows, investors are abandoning the stock. At roughly $250 per share, Meta would trade at 18 times trailing earnings -- a valuation that mirrors what you'd find from defensive stock plays. At that price, Meta doesn't necessarily have to grow at a fast rate to justify its newly fallen share price.

That said, the reaction to Meta's announcement serves as a stark reminder that even a large company can fall from grace. It'll be interesting to see whether the social media stock keeps dropping as momentum investors give up on the company or whether value investors step in to put a floor under the share price.

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Sources
https://www.youtube.com/watch?v=Z0FWzz56Rw8
https://www.bloomberg.com/news/articles/2022-02-03/meta-set-for-200-billion-wipeout-among-worst-in-market-history
https://www.fool.com/investing/2022/02/02/meta-just-ruined-a-good-day-for-the-stock-market/