Meta Is on Brink of Falling Out of Top 20 Biggest US Stocks
Meta Platforms Inc. shareholders are paying dearly for its spending on the metaverse: The Facebook parent's market value has collapsed by a whopping $520 billion in the past year, and now it's on the brink of getting booted from the ranks of the 20 largest US companies.
The punishment shows no signs of easing anytime soon. Meta's stock is down as much as 23% in premarket trading after it spooked investors with ballooning costs to fund its version of virtual reality and a decline in revenue.
Meta was the sixth biggest US company by market capitalization at the start of the year, flirting with a $1 trillion market value. Fast forward 10 months and the stock will be worth about $283 billion, ranking it 20th, if it opens regular trading in line with its decline in the premarket. It will now be smaller than companies including Chevron Corp., Eli Lilly & Co. and Procter & Gamble Co.
Once a Wall Street darling, Meta is gradually losing favor with brokerages. At least three investment banks -- Morgan Stanley, Cowen and KeyBanc Capital Markets -- cut their rating on the stock after the company gave a disappointing quarterly revenue outlook.
“Meta remains too aggressive with its investments in long-term initiatives despite a sharp deceleration in expected revenue growth,” said Mandeep Singh, an analyst at Bloomberg Intelligence. “The company's opex and capex view for 2023 is surprising, given the lack of traction so far with its metaverse efforts.”
While Thursday's premarket slump is a big move, it pales in comparison to its record-setting rout in February when it plunged 26% on the back of woeful earnings results, and erased about $251 billion in market value. That's the biggest wipeout in market value for any US company
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