CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in ... [+]
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Ou-uch! Nearly $30 billion has vanished from Mark Zuckerbergs fortune, an evaporation caused by a steep drop in Meta stock on Thursday.
Meta shares lost more than a quarter of their value as investors weighed an unsettling collection of financial figures detailed by the company in a quarterly earnings report Wednesday evening. The selloff wiped away $230 billion in Metas market value.
Attention has turned largely to two matters. One is a decline in Facebook daily users during the fourth quarter. It‘s worth emphasizing the D-word—decline—since this marks the first time the platform has experienced such a decrease. Facebook blamed the downturn on increased competition from TikTok and a rise in internet data costs in India. It is the most recent sign of Facebook’s struggles to maintain what was a decade-long dominance over social media. That has long been obvious about America, but Facebook has managed to make up for the drop in the U.S. with growth overseas. Now, trouble at home and abroad is a new, two-front mess for the company, which still relies on ads sold on Facebook and Instagram for the bulk of its $118 billion in annual revenue.
This ties directly into the second trouble bothering investors. With the core Facebook platform suffering, Zuckerberg has shifted the company‘s focus to augmented and virtual reality technologies, an attempt to build a new social network around the idea of a metaverse to attract young users. But getting to the metaverse isn’t going to be a fast journey—or an inexpensive one. Facebook spent $10.1 billion on the plan in 2021 and expects a “meaningful increase” in such expenses this year, Chief Financial Officer Dave Wehner said on a call with analysts last night.
Zuckerberg and Meta have experienced a miserable few months, and despite many years of scandal and a Teflon stock, the weight of all that is coming down on the shares. Which is bad for Zuckerberg personally; the majority of his net worth is centered in Meta stock. It‘s not great either for Facebook cofounders Dustin Moskovitz (down $3.9 billion Thursday) and Eduardo Saverin ($4.2 billion), who have moved on from Facebook but retain significant stakes in the business. With the drop, Zuckerberg no longer ranks among the ten richest people in the world. (He’s No. 12 at the moment.) The plummet in his fortune is one of the largest single-day losses for any billoinaire ... ever, likely only behind a $33 billion tumble for Elon Musk last year.
In addition to the metaverse and growth concerns, a whistle-blower scandal enveloped the company last fall, prompting fresh questions about its handling of bad content on its site—and about Zuckerberg‘s leadership. Another complication: Apple’s change to its iPhone software, which has made it harder for companies like Meta to sell digital advertising. Meta on Wednesday said it expects to lose $10 billion in annual revenue from the switch. Combine this all, and Meta shares have sunk 30% since September, a point when they had been at record highs.
A sinking stock, declining users—interwoven problems that Meta and Zuckerberg havent had to contend with during most of the last two decades. Until just about now.