Meta stock price crashed hard in extended hours after the company published weak results. The shares plunged to a low of $104, which was the lowest level since 2016. It has crashed by more than 74% from its all-time high.
As a result, the company’s market cap has plunged to about $348 billion, which is lower than its all-time high of near $1 trillion. Mark Zuckerberg’s net worth has dropped by more than $76 billion to about $48 billion. So, is it safe to buy the Meta stock?
The rise and fall of Meta Platforms
Meta Platforms is the parent company of Facebook, Instagram, and Whatsapp. After experiencing substantial success in the past decade, Meta is now recoiling as it faces four key challenges.
First, the company’s ad business has struggled because of Apple’s iPhone 14 update. The update made it possible for people to disable tracking. As a result, it has become almost impossible for Meta to provide targeted ads in its platform.
Second, Facebook’s pivot to the metaverse has stumbled. Its virtual reality products have not gained any traction. According to the WSJ, most people who buy its VR products don’t use it regularly enough. As a result, there are concerns that the firm will not take a substantial market share in the industry.
Third, Meta stock price has crashed because of the falling ad business. In the most recent quarter, Meta said that its revenue dropped by 4% to $27.7 billion. This decline was partly because of the strong US dollar. According to the management, many companies have continued slowing their ad spending in its platforms.
Fourth, Meta platform faces the challenge of competition from companies like TikTok. TikTok is a major challenge since it has gained and maintained traction among young people globally. Facebook and Instagram feel old while Whatsapp has become difficult to monetize.
Meta stock price forecast
The four-hour chart shows that the Meta Platforms share price nosedived after the company published weak results. As it dropped, it moved below the important support at $122.5, which was the lowest level on October 13. It has crashed below all moving averages while volume has jumped sharply.
Therefore, the stock will likely continue falling since there is no catalyst for the company. As such, it could crash to about $80 soon. A move above the resistance at $122 will invalidate the bearish view.