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Mark Zuckerberg lost $29 billion in net worth on Thursday as Meta Platforms Inc's stock marked a record one-day plunge after the social media giant issued a dismal forecast.
Meta's stock fell 26%, erasing more than $200 billion in the biggest ever single-day market value wipeout for a US company. That pulled down founder and Chief Executive Officer Zuckerberg's net worth to $85 billion, according to Forbes. Zuckerberg owns about 12.8% of the tech behemoth formerly known as Facebook.
Meta reported a decline in daily active users from the previous quarter for the first time as competition with rivals like TikTok, the video sharing platform owned by China's ByteDance, heats up. The disappointment over Meta's earnings and the subsequent stock fall invoked memories of the bursting tech bubble in 2000.
Analysts across the world have weighed in on the stock crash and tried to decode the reasons behind historic crash.
Nikhil Kamath, co-founder of Zerodha and TrueBeacon, said the decline is a natural consequence of the company's unprecedented growth.
"It’s an unrealistic expectation for the platform to gain users at the same momentum indefinitely. India is Facebook’s largest market, in terms of the number of users so it’s obvious how India would play a major role in how this plays out for the global market," he said.
The social media giant in its fourth quarter results statement said increase in data rates in India limited the user growth of Facebook in the December quarter.
Telecom companies Bharti Airtel, Vodafone Idea and Reliance Jio had increased their mobile service rates in the range of 18 to 25% in the December quarter.
Net profit of Meta declined by 8% to $10.28 billion in the reporting quarter, from $11.21 billion a year ago. Its monthly active users (MAUs), however, grew 4% on an annual basis to 2.91 billion, while daily active users (DAUs) increased 5% to 1.93 billion, as of December 31, 2021.
"Facebook user growth was impacted by a few headwinds in the fourth quarter. In Asia-Pacific and Rest of World, we believe Covid resurgences during prior periods pulled forward user growth. User growth in India was also limited by an increase in data package pricing. In addition to these factors, we believe competitive services are negatively impacting growth, particularly with younger audiences," Meta's Chief Financial Officer Dave Wehner said during an earnings call.
“Typically, a drop in valuation and stock prices can be attributed to a variety of factors. For Facebook, I've seen analysts speculate how competing apps are negatively impacting growth. In a country where their most prominent competitor 'TikTok' is banned, we've still seen slower growth, so I wouldn't say that's the only factor by any measure," Nikhil Kamath said.
"Facebook’s leadership has also attributed it to the hiked telecom prices in India, and while there may be a correlation between the hiked telecom prices, and the slower user growth for Facebook - it cannot possibly be the largest attributing factor," he added.
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