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Stocks Plunge After Facebook’s Huge Promote-Off, Nasdaq Falls 3.7%
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Feb
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Stocks plunge after massive Facebook sell-off, Nasdaq falls 3.7%
through Adam | February 3, 2022
The top line
The stock market fell on Thursday — its first day down in five sessions — as investors again dumped shares in tech stocks that were under pressure after Facebook parent Meta Platforms reported lackluster earnings and warned of challenges for its business this year.
Snap and Twitter, two of the most popular social media platforms, crashed after the technology’s recent resurgence … [+]
Richard Drew/ASSOCIATED PRESS
Here are some important facts
The Dow Jones Industrial Average fell 1.5%, over 500 points, while the S&P 500 lost 2.4% and the tech-heavy Nasdaq Composite 3.7%.
Tech stocks led the market lower on Thursday: Despite a recent comeback after a big sell-off in January, renewed investor optimism about tech stocks took a sharp tumble after Meta’s massive earnings drop.
The company issued a weaker-than-expected sales forecast. Management warned of increasing competition, slower user growth and ongoing challenges due to changes in Apple iOS advertising.
Shares of Facebook parent Meta are on track for their biggest one-day loss ever, falling 26% and wiping out over $230 billion in market value alone, with the company’s market cap now hovering around $670 billion located.
Social media stocks were particularly hard-hit after Meta’s big profit slump: shares of Snap, formerly known as Snapchat, plunged 23%, while image-sharing platform Pinterest fell 10% and social media platform Twitter 6% lost.
Other big tech companies also fell, such as Alphabet (down more than 3%), Microsoft (down almost 4%) and Amazon (down 7%).
Important background
Strong gains from companies like Alphabet, Apple and Microsoft helped push investors back into tech stocks after January’s sell-off, when the Nasdaq fell into correction territory, losing 9% in the month alone. That renewed optimism over the past few days has proved short-lived, however, as investors dumped tech stocks again after Meta’s dismal earnings report late Wednesday.
The most important quote:
“This is not just a disappointing quarter, but an existential moment for Meta, one that will force investors to take a long, hard look at the company’s competitive position and consider whether it is headed for an extended period of underperforming — it will be.” make it difficult for the stock to recover quickly,” predicts Adam Crisafulli, founder of Vital Knowledge.
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