The collapse of Facebook parent company Meta since its reorganization a few months ago has been catastrophic for the company and CEO Mark Zuckerberg. The company has lost more than a half-trillion dollars in value since Labor Day, and most of that crash has come in just the last few weeks.
Over its life as a publicly traded company, Facebook parent Meta Platforms Inc. has repeatedly demonstrated an ability to rebound after earnings disappointments or various controversies have weighed on the stock. Not this time.
The shares are coming off their lowest close since May 2020, and are down more than 45% from a September peak, a decline that’s unmatched among big U.S. tech stocks in recent years. The slump has pushed Meta out of the top 10 of largest global companies by market value, yet also left it trading at its cheapest on record.
The stock has seen a drumbeat of bad news, including Google’s announcement this week that it would bring a privacy initiative to Android phones. While the company said the move is ad-friendly, it’s reminiscent of Apple Inc.’s changed privacy policy, which dented digital advertising and was a factor behind Meta’s catastrophic earnings report this month. The results called its growth prospects into doubt and spurred the biggest selloff in Wall Street history in terms of value erased.
“The management team needs to show investors over the next few quarters a path to growth,” said David Wagner, portfolio manager at Aptus Capital Advisors. He added that the stock, which he owns, is “in purgatory,” and that sentiment “couldn’t be lower.”
Meta’s growth woes stand in stark contrast to other technology behemoths, which reported strong results this season, helping limit declines in their stocks amid a mostly negative start to 2022.
Investors have long been quick to buy big tech on weakness, as they bet that the group will continue to see robust growth. As a result, declines of the magnitude that Meta has seen haven’t happened in the era of trillion-dollar market caps for the companies.
Apple hasn’t had a 40% drawdown since 2013, according to data compiled by Bloomberg. For Microsoft Corp., Amazon.com Inc., or Alphabet Inc., the last time they had a peak-to-trough drop of this scale was around the financial crisis.
Meta “is the company people love to hate, and Alphabet is an easy alternative if you want exposure to online advertising,” said Bill Stone, chief investment officer at the Glenview Trust Co. “You don’t get tough questions from clients for owning Alphabet, which is doing well and not nearly so hairy as a company.”
"Google: We're not as evil as Facebook!" Nice slogan, huh.
And yet it works. Google has actually taken steps to increase security and protect user privacy, while it seems like every week we get a new tech journalism article that finds Facebook is selling your info to somebody different every time without your consent. Hell, the company is still cleaning up privacy violations from a decade ago and that's just in the US, over in Europe, things are looking even more grim for Meta.
Even the state of Texas is suing Facebook over privacy laws these days.
Texas is suing Facebook over allegations that the social media giant violated Texans’ privacy through the company’s previous use of facial recognition technology, according to a complaint filed Monday.
“Facebook will no longer take advantage of people and their children with the intent to turn a profit at the expense of one’s safety and well-being,” Texas Attorney General Ken Paxton (R) said in a statement. “This is yet another example of Big Tech’s deceitful business practices and it must stop. I will continue to fight for Texans’ privacy and security.”
The lawsuit alleges Facebook, now under the parent company Meta, captured biometric data of Texans for commercial purposes without their informed consent and failed to destroy collected identifiers within a reasonable time.
The lawsuit also alleges that Facebook violated the privacy of people who were not even users on the platform by collecting biometric identifiers from photos and videos “innocently uploaded by friends and family who did use Facebook.”
“There was no way for such non-users to know of or contest this exploitation,” the complaint states.
The lawsuit was first reported by The Wall Street Journal. A person familiar with the matter told the Journal the lawsuit seeks civil penalties in the hundreds of billions of dollars.
After the last few weeks, Meta has already lost hundreds of billions of dollars.
Couldn't have happened to a nicer company.
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