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$80bn wiped from value of Facebook and Instagram owner Meta

$80bn wiped from value of Facebook and Instagram owner Meta

Investors have wiped $80 billion (PS69bn) of the worth of Facebook and the Instagram's owner, Meta, after Mark Zuckerberg's business reported that its profits fell by half in the third quarter, as advertisers cut spending to a minimum amid the global economic slowdown.

The drop of 25% in the price of Meta's shares from Wednesday evening has taken billions of dollars off the fortune of Zuckerberg its chief executive and the company's largest shareholder.

The downturn began during the overnight trading period following a weak presentation of the results, and continued until markets opened on Thursday. It was among the biggest declines Wall Street has seen since confidence among investors for Silicon Valley stocks began to fall at the beginning this year.

Meta's shares briefly dropped below $100, bringing them to their lowest levels since the year 2016. Investors were doubtful of Zuckerberg's assertion that the future of his company is in the metaverse, the virtual reality realm that users can experience with the Oculus headsets.

With 13% of the Meta stake Zuckerberg saw his worth drop by $90 billion since the beginning of the year, as the majority of his wealth is invested in the company's shares. The company's shareholding was just more than $125 billion at the beginning of 2022 according to Bloomberg information, however its value has since dropped to around $35 billion.

Reality Labs, the company's metaverse division, posted the $3.7bn loss in the last three months. The company predicted that the losses to "grow substantially year-over-year" by 2023,report by online slot machines for real money.

Meta, also owned by WhatsApp and WhatsApp, announced $27.7bn in revenue in the third quarter, which was higher than forecasts by analysts with sales shrinking by 4% when compared to the same time a year ago. The company earned $4.4bn profit in the same time frame, which is less than $9.2bn it posted the previous year. The company also warned of lower trading going forward.

In the midst of increasing rivalry of TikTok, Meta is also suffering from a decrease in its advertising budget. Meta's latest results are the latest in a string of disappointing earnings announcements. The company has made significant investments in its latest products, but they have not yet bring results. It has lost $230bn worth of market capitalization in February, the largest loss of one day ever recorded by an US company, following its shares fell by 26 percent.

Meta's expenses and costs grew by 19% during the third quarter, compared to the same period a year ago. This was a result of the amount of money spent on the metaverse as well as its video-content service in short form Reels.

As investors expressed concern regarding the losses, Zuckerberg said he was convinced that his investment in the metaverse as well as different "experimental bets" will begin to be rewarded. Over time they will become very significant investments in what's to come for our company, he said. This is among the most important work we're undertaking. The people will review this years from now and speak about the significance of the work completed here.

He also said: While we face near-term issues with revenue growth however, the fundamentals are there to ensure a return to higher growth in revenue. Meta along with other technology companies are impacted by the fear of inflation and recession. The parent of Google, Alphabet along with Microsoft as well disappointed investors by their third quarter results.

Additionally, Meta has struggled with modifications that were made to Apple privacy policies that were enacted in 2021 which undermined its main advertising model which , according to the company's predictions, could cause Meta to drop an estimated $10 billion in advertising revenue by 2022.

The separation of Facebook's business and its metaverse project may be a way to restore the share price, as suggested by Sir Martin Sorrell, the founder of the digital advertising company S4 Capital.

If you manage to break Reality Labs, where the investments are done in the metaverse in those on the Facebook as well as Instagram platform ... it may see a completely different market outcome, and you could observe an increase to the market value Facebook platforms. said the broadcaster on BBC Radio 4. Today program.

Meta suggested the possibility of job cuts after initially the announcement of a hiring freeze and a possible changes in the September. The company stated that it will be holding certain teams by head count and cutting others, and investing in expansion in headcounts only in the most important areas. The company added: As a result, we anticipate that headcount by 2023's close to be roughly in line with the third quarter of level in 2022.

Meta has projected a decrease in its revenue for the entire year which is the first since it popped on the stock exchange in 2012. Its third-quarter loss was a sign that Meta had been too focused on its new ventures, according to Debra Aho Williamson who is an analyst from Insider Intelligence.

Meta is in a state of uncertainty with regards to the situation the company's business operations she stated. To get back to a higher growth rate, Meta needs to turn its business around. Meta would gain from less emphasis to the metaverse and instead focusing on improving its core business.