ColdFusion - Why Meta Lost $230 billion [Biggest Company Loss in History]

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Starting point is 00:01:09 As I've said many times before, Facebook now Meta is the company that everyone loves to hate. With that in mind, it's easy to see why the events of yesterday came with such great joy to a lot of people. Meta's market cap fell by 26% in one day, erasing $240 billion of value, 25% in one day. This was the biggest single-day market cap drop in history for a US publicly traded company. Zuckerberg personally lost $29 billion in the collapse. So what caused it? And what does this signal for the company? You are watching Tull Fusion TV. So why did the stock fall so much? Well simply put, the Facebook platform is losing popularity. Back in 2018, younger Americans and Europeans began to leave the platform in droves.

Starting point is 00:02:01 Back then, that was still okay for Facebook's bottom line because the developing market uptake was growing at a much faster rate than Western markets were leaving. In an earnings report yesterday, the company stated that, for the first time in its history, the Facebook social network platform was losing daily users overall. The Facebook platforms Indian, African, and Latin American markets are now bleeding users.

Starting point is 00:02:26 The platform may have reached peak saturation, Young people in developing markets now go straight to TikTok, and in Western markets, Facebook is now seemingly a destination for old people and mother's groups. Everyone else mainly uses it for messenger, groups and events. The main Facebook wall where most of the advertising takes place isn't exactly why people log on anymore. Apple's move to make ad tracking more difficult has also hurt Facebook's bottom line. The Facebook business model is advertising-driven after all. In short, meta wasn't going to be making as much money from Facebook as they forecast.

Starting point is 00:03:01 This news surprised the markets. And if you know anything about trading, markets absolutely hate surprises. And from there, we saw the biggest wipe out in history. Will this truly be the future for Facebook? Look, it's obviously a pivotal point for Facebook here. And the question is, what happens over the next few years? Does it recover and is it able to pivot into a Metaverse first company? Is it able to compete with TikTok?

Starting point is 00:03:24 Is it able to actually lean into video the way market? Zuckerberg wants it to or does the stock languish for the next 15 years like we saw with Microsoft after 2000. It is rare when you find so many people getting the story so wrong going into a print. I mean, if you consider the 52 analysts on Wall Street who cover the stock, 42 of them, 42 of the 52 have either buys or market outperform ratings on the stock. That's how off sides the street is on the story at this point in terms of this print and the guy, Tim. Facebook losing popularity isn't the only reason for the fall. Two and five Canadians will hear the words you have cancer.

Starting point is 00:04:05 That's why every step and dollar raised matters. On September 19th, join thousands in Toronto for the Princess Margaret Cancer Foundation walk. Challenge yourself, friends and family to walk 21 kilometers in support of life-saving research. Together, we can carry the fire and help create a world free from the fear of cancer. Register today at pmcfwalk.ca.ca. When you're a mid-sized business, you need every competitive advantage you can get. Like an AI solution that works for you, not against you. SAP Grow is built with AI embedded at its core, working across every system.

Starting point is 00:04:44 And it's ready to go from day one so you can hit the ground running. Bring it with SAP Grow. AI Cloud ERP for any size business. The whole meta company. company is going through a lot of controversy. As we discussed in other Cold Fusion episodes, there's been major pressures on meta from regulators and other government bodies, after the harm that Instagram and Facebook causes to teens was exposed over and over again by various whistleblowers. To add to this, the Metaverse ventures have already lost the company $8.3 billion.

Starting point is 00:05:16 And yesterday it was revealed that the Oculus Quest headset had lost $3.3 billion in one quarter, despite revenues reaching $900 million. it's likely that investors would like to see some results from a venture into the Metaverse sooner rather than later. And it's not like there's no money to be made. Real estate sales in the Metaverse exceeded $500 million last year and it's expected to double this year. To succeed here, meta needs a big slice of the growing pie. In addition to this, growth and risk stocks may have had their time in the sun. Overall, the US economy isn't looking too great. The country just crossed $30 trillion in debt and may dip into recession with the Atlanta Fed predicting GDP growth

Starting point is 00:06:01 next quarter of 0.1%. Inflation is rising to record highs. Seventy percent of GDP last quarter was companies simply hoarding stock inventory in fears of inflation. People are quitting their jobs en masse and interest rates are rising. Many investors are asking themselves, does this seem like a great time to be putting my money in speculative tech stock plays? For now, The answer may still well be yes, but in a couple of years, investors may look elsewhere for safer returns. So, is this the end of Meta? Hardly. Karen, I'll go to you first. Is down 22% warranted? It seems a little overdone to me, but, you know, we talk about the three-day rule all the time and certainly, I think, you know, let this shake out.

Starting point is 00:06:48 Other Meta subbrands, like WhatsApp and Instagram, are still adding users. Meta also plans to focus on their short video format. reels to bring in more users and generate revenue. This recent crash of Meta was most likely just a stock market overreaction and the stock will probably bounce back in no time. But if the company keeps on missing earnings targets, things may play out differently. After all, just back in June of last year, Meta was worth $1 trillion and now it's down 35%, but ultimately it's way too early to tell what this could mean. So what do you guys think about this? Do you see this as just a blip in the road? Or do

Starting point is 00:07:25 Do you think that this might be something bigger? A sign of things to come for metal. I do think that this crash being the biggest single-day value loss in history might tell us something. Let me know your thoughts in the comments section below. If you want to discuss this in more detail or suggest a future video, head on over to the Cold Fusion Discord. If you want to listen to the podcast versions of these videos, they're now available on Spotify and other streaming platforms.

Starting point is 00:07:49 So thanks for watching. My name is Dago, and you've been watching Cold Fusion, and I'll see you again soon for the next episode. Cheers, guys. Have a good one. Two and five Canadians will hear the words you have cancer. That's why every step and dollar raised

Starting point is 00:08:33 matters. On September 19th, join thousands in Toronto for the Princess Margaret Cancer Foundation walk. Challenge yourself, friends, and family to walk 21 kilometers in support of life-saving research. Together, we can carry the fire and help create

Starting point is 00:08:49 a world free from the fear of Cancer. Register today at pmcf walk.ca.ca.

ColdFusion - Why Meta Lost $230 billion [Biggest Company Loss in History]

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