Just as the market, and specifically tech stocks, seemed to be making a recovery, a Meta Platforms (parent company of Facebook) earnings call caused a plummet in after-hours trading on Feb. 2. The dip continued through market open on Feb. 3.
The Nasdaq composite fell 2.6%, the S&P 500 dipped 1.5%, and the Dow Jones Industrial Average lost 0.8%, per CNBC, dashing hopes of a budding market recovery. “Facebook is a confidence builder,” TD Ameritrade chief marketing strategist JJ Kinahan told CNBC, pointing out that the stock is “super widely held,” and “a core part of many portfolios.”
The Facebook stock decline pulled other social media-focused tech stocks, including Twitter, Pinterest, and Snap — along with semi-social platform Alphabet (parent company of Google) with it. Alphabet stock dipped nearly 2%, in spite of its own strong Feb. 2 earnings call. Twitter fell 8.4%, Pinterest dropped by 10% and Snap fell roughly 17%, according to SeekingAlpha.
How bad was it for Meta, whose shares fell nearly 22% on Feb. 2? The company lost $193 billion in market capitalization. By mid-day on Feb. 3, Twitter, Pinterest and Snap had started to gain back lost ground, rising a few percentage points each. Meanwhile Meta plunged deeper, showing a loss of close to 25% by noon.
Facebook’s user base has declined quarter-over-quarter, a fact only slightly masked by Meta’s tactic of grouping application revenue from Instagram, Facebook, and other apps together into one revenue category, per SeekingAlpha.
Are Facebook’s struggles indicative of a larger social media trend, or, after nearly 18 years, is the platform beginning to run its course as millennial and Gen X users flock to TikTok?
Kinahan attributes some of the apprehension to the upcoming Fed rate hikes. “All assets have a different value than they did,” he told CNBC. The larger question, however, is what the future will bring for stocks in the tech sector. “Is this a Meta-specific issue, or is this going to be an overall issue?” Kinahan pondered while speaking to the outlet.
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