A carnage in US technology stocks widened on Thursday (Oct 27) as shares of Meta Platforms sank 20 per cent after the Facebook parent's costly metaverse bets and the impact of soaring inflation on ad spending spooked investors.
Meta was set to lose about US$67 billion in market value, if losses hold through the session, adding to the trillions of dollars that some of the biggest tech names have shed this year in the face of rising interest rates and a stronger dollar.
Meta's results come a day after Google-parent Alphabet and Microsoft posted dismal numbers, sparking a wide-spread selloff in tech stocks.
A year after changing its name to Meta to focus on shared virtual reality, the company posted an accelerating sequential decline in quarterly revenue.
Meta also bumped up its full-year 2023 total expenses outlook to US$96 billion to US$101 billion, significantly higher than a revised estimate for 2022 total expenses of US$85 billion to US$87 billion.
Chief Executive Mark Zuckerberg has said he expects the metaverse investments to take about a decade to bear fruit.
At least eight brokerages slashed their price targets on Meta, with Baird's US$80 cut to US$150 - the steepest of the lot.
The stock was trading at US$104 before the opening bell.
"Investors are sending the signal to Mark Zuckerberg that he should slow down the ambitions and cost associated with the Metaverse, but he is doubling down increasing the losses for next year," said Peter Garnry, head of equity strategy at Saxo Bank.
Some analysts were harsher in their assessments.
"The frustration for Meta investors is that Mark Zuckerberg seems to be wearing a pair of Oculus VR glasses 24/7 and hasn't realised that his VR isn't aligned to R (aka reality, aka returns, aka responsibility, to shareholders)," said Neil Campling, head of TMT Research at Mirabaud.