Tech rout expands as Meta sinks following results By Stocksak

© Stocksak. FILE PHOTO – A logo of Meta Platforms Inc. can be seen at its booth at the Viva Technology conference, dedicated to innovation, at Porte de Versailles exhibition centre in Paris, France, June 17, 2022. REUTERS/Benoit Tessier

(Stocksak). A carnage in U.S. tech stocks widened Thursday as shares of Meta Platforms Inc fell 20% after the Facebook parent’s expensive metaverse bets. Investors were also worried about the impact of rising inflation on ad spending.

Meta was expected to lose $78 billion in market value if losses continue to the end of session. This adds to the trillions of dollar that tech companies have lost this year due to rising interest rates, and a stronger dollar.

Meta has seen a loss of more than half a billion dollars in market value this year. Its shares were trading at $100.55 on Tuesday, their lowest level since February 2016.

The company’s results are coming a day after Microsoft (NASDAQ) and Google (NASDAQ) posted disappointing numbers, triggering a widespread selloff of technology stocks.

Analysts stated that investors are concerned because Meta is spending capital-intensive projects at the same time as the ad market, which is a major source for revenue for the company is drying up.

The company anticipates spending about $10 billion annually on metaverse software and hardware. On Wednesday, Chief Executive Mark Zuckerberg said that he expects these investments to yield results in about a decade.

Mike Proulx, research director for Forrester, stated that Meta Horizon Worlds is currently a relatively quiet place compared to other 3D immersive games like Fortnite and Roblox.


However, Meta’s aggressive spending in the metaverse is likely to be a boon to one segment of the wider technology sector – the chipmakers.

Its plans will require capital expenditure for new infrastructure and data centers, said Ben Barringer of Quilter Cheviot.

Meta’s plans could be a boost for data center-focused businesses like Broadcom (NASDAQ) Inc, Advanced Micro Devices/NASDAQ:) Corp and Nvidia/NASDAQ:) Corp. Their stock prices rose between 1.4% to 4.3%.

Meta’s prospects are grim a year later after it changed its name in order to focus on the metaverse. This shared virtual reality, where people can interact through avatars, is a shared virtual universe.

Reality Labs, the company’s metaverse unit has lost $9.44 Billion in revenue so far this year. Last year, the unit suffered more than $10 Billion in losses.

Meta predicted that the unit would lose more in 2023 and promised to “pace” future investments.

Minimum 13 brokerages have reduced their price targets for the stock, with J.P. Morgan dropping to a Wall Street low at $115

Graphic: Meta’s Reality Labs continues to sink in losses –

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