The stock market fell on Thursday—its first down day in five sessions—as investors once again dumped shares of tech stocks, which were under pressure after Facebook parent Meta Platforms reported lackluster profits and warned of challenges to its business this year.
The Dow Jones Industrial Average fell 1.5%, over 500 points, while the S&P 500 lost 2.4% and the tech-heavy Nasdaq Composite 3.7%.
Tech stocks led the market lower on Thursday: Despite a recent comeback after a big selloff in January, investors’ renewed optimism in tech stocks took a sharp downturn following Meta’s massive earnings miss.
The company issued weaker-than-expected revenue guidance, with management warning about rising competition, slowing user growth and ongoing challenges from the Apple iOS advertising changes last year.
Shares of Facebook parent Meta are on pace for their biggest one-day drop ever, falling 26% and erasing over $230 billion in market value alone, with the company’s market capitalization now standing at around $670 billion.
Social media stocks were particularly hard-hit following Meta’s big earnings miss: Shares of Snap, formerly known as Snapchat, plunged 23%, while image-sharing platform Pinterest lost 10% and social media platform Twitter 6%.
Shares of other Big Tech companies moved lower as well, including Amazon (down 7%), Alphabet (over 3%) and Microsoft (nearly 4%).
Strong earnings from the likes of Alphabet, Apple and Microsoft helped push investors back into tech stocks after January’s selloff when the Nasdaq fell into correction territory, down 9% for the month alone. That renewed optimism in recent days has proved short-lived, however, with investors once again dumping tech shares after Meta’s dismal quarterly earnings report late on Wednesday.
“This isn’t simply a disappointing quarter but rather an existential moment for Meta, where investors will be forced to take a long and hard look at the company’s competitive position and consider whether it isn’t heading into a prolonged period of subpar performance—this will make it hard for the stock to quickly rebound,” predicts Vital Knowledge founder Adam Crisafulli.