Meta Platforms (NASDAQ:META) stock crashed after reporting another down quarter. , $1.64/share. Revenue fell by 4% to $27.7 billion.
In pre-market trading on Oct. 27, the stock was fighting to hold $100 after trading near $130 at the Oct. 26 market close. The shares started the year at about $330. Over $600 billion in Meta’s market capitalization has been destroyed.
Why, Meta Why?
There are two reasons for the crash.
First, advertising is down as companies anticipate a recession. Meta is especially vulnerable since Apple (NASDAQ:AAPL) stopped sharing user data. Numbers coming out of Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), with its , should have been a warning.
Second, in his conference call CEO Mark Zuckerberg refused to back off investments in a virtual reality environment that is costing billions each quarter but not bringing in revenue. He told analysts “things are going in and asked for “patience.” Analysts responded by .
Meta is now trading for less than it did five years ago, with analysts saying things like and comparing the current market to .
The problem with that analogy is that, while cloud growth is , it’s still , and from a very high level. Cloud spending may get near $500 billion this year, , and Meta owns with more on the way. All claim to use 100% renewable energy.
Bulls like TV host Jim Cramer, who complained the company before the numbers came out, , and was greeted with jeers by other traders. Cramer was angry that Meta’s troubles weren’t pre-announced.
META Stock: What Happens Next?
Meta is definitely the “disaster du jour” but there remains value in its data centers and global business. Facebook, Instagram, and WhatsApp are still primary communication media platforms in the developing world.
A floor for the stock is there. Traders will spend the next few days searching for it. It’s likely to be an investable number.
On the date of publication, Dana Blankenhorn held long positions in AAPL and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
