No wonder Mark Zuckerberg is so keen on the idea of the metaverse, said Alistair Osborne in The Times. The “real world” can be very hard to bear. More than $230bn was wiped off the value of Meta – parent of Facebook, Instagram and WhatsApp – in a day last week, when the group released full-year figures showing a decline in users for the first time in its 18-year history. The problem, in a nutshell, is that Meta is losing users to TikTok, while Apple’s changes to privacy settings (making it harder to track personal data) will cost Meta $10bn in ad revenues this year. As commentators were quick to note, the $31bn drop in Zuckerberg’s personal fortune was equivalent to the annual GDP of Estonia. All in all, rather a nasty “brush with reality”.
Talk about a “Zuck shock”, said Katie Martin in the FT. The 26% plunge “was the biggest drop in absolute terms in a US company’s market value ever”, and enough to produce the worst day for the whole S&P 500 in more than a year. For years, “those of a more nervous disposition have been concerned about the outsized role Big Tech plays in US markets” – the worry being that “if they hit a bump, they could topple the rest of the market with them”. After last week’s carnage, that fear is no longer so theoretical.
“There comes a time in every great bull market where the dreams of investors collide with the changing facts on the ground,” said The Economist. Far from being “invincible”, Meta comes across “as a business with decelerating growth, a stale core product and a cost-control problem”. Its troubles reflect two kinds of competition. The first is within social media, where the Chinese-owned app TikTok has become a formidable competitor, despite attempts by former president Donald Trump to ban it on national security grounds. The second is the “intensifying contest” between the Big Tech platforms themselves as they diversify into new services. “The narrative of the 2010s – of a series of natural monopolies with an almost effortless dominance over the economy and investment portfolios – no longer neatly reflects reality.” New winners and losers are emerging.
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This has been a week of wild price swings, said James Mackintosh in The Wall Street Journal – as illustrated by Amazon, which, a day after Meta’s big bust, notched up “the biggest market value gain of any US company ever”. These extraordinary moves in Big Tech stocks “in response to small changes in their earnings” shows “what a wacky market we’re in”. Uncertainty about the future of the economy and the tech sector in particular is extremely high. Last week, Meta paid the price.
