Facebook’s parent drags down indexes
Wall Street’s 4-day win streak ends after historic Meta drop
A historic plunge in the stock price of Facebook’s parent company helped yank other tech stocks lower on Wall Street Thursday, abruptly ending a four-day winning streak for the market.
The 26.4 percent wipeout in Meta Platforms, as Facebook’s owner is now known, erased more than $230 billion in market value, easily the biggest one-day loss in history for a U.S. company. The stocks of other social media companies including Twitter and Snap also fell.
Because Meta is valued so highly, a big swing in its stock price can also sink or lift broader market indexes. The S&P 500 fell 2.4 percent, its biggest drop in nearly a year. The tech-focused Nasdaq composite gave up 3.7 percent, its biggest loss since September 2020. The Dow Jones Industrial Average, which does not include Meta Platforms, fell 1.5 percent.
Meta sank after forecasting revenue well below analysts’ expectations for the current quarter following privacy changes by Apple and increased competition from Tiktok. It was a disappointment for a company that investors have become accustomed to delivering spectacular growth. Meta also reported a rare decline in profit due to a sharp increase in expenses as it invests in transforming itself into a virtual reality-based company.
The steep drop weighed on fellow social media company Twitter, which fell 5.6 percent. Snapchat’s parent company Snap sank 23.6 percent and Pinterest lost 10.3 percent. Snap soared 54 percent and Pinterest vaulted 28 percent in after-market trading after each reported better-than-expected results. Amazon.com jumped 18 percent in after-hours trading after reporting strong fourth-quarter results despite supply chain snags.
Big technology and communications companies played a big role in driving gains for the broader market throughout the pandemic and much of the recovery in 2021, but the market seems to have shifted, said Brad Mcmillan, chief investment officer for Commonwealth Financial Network.
The S&P 500 fell 111.94 points to 4,477.44. The Dow dropped 518.17 points to 35,111.16. The Nasdaq slid 538.73 points to 13,878.82.
Small company stocks also fell. The Russell 2000 index lost 38.48 points, or 1.9 percent, to 1,991.03.