Shares in Facebook parent company crash as investors flee

Shares in Meta plunged as the market opened in the US following a drop in quarterly profits, sliding nearly 23%.

The fall compounded the company’s woes, with investors wiping $520bn from Meta’s market value since the start of the year.

The parent company of Facebook, Instagram, and WhatsApp lost more than $80bn overnight following the release of the disappointing financial results, and an unconvincing pitch to investors on the future of the metaverse.

Tech giants, which for several years have acted as the main engine of growth for the US stock market, are now warning that advertisers are pulling back amid an uncertain economic outlook.

As a result, revenue in the third quarter fell for a second consecutive time to £23.83bn from £24.94bn.

Meanwhile, net income fell to £3.78bn from £7.9bn a year earlier.

The company has come under fire from investors for failing to cut back on its spending, following a rapid growth in hiring over the pandemic. Meta has also been criticised for focusing too heavily on virtual reality and the metaverse, neither of which are expected to generate returns for several years.

"We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities," Meta said on Wednesday. But it added that it expected the number of people it employed by the end of the year to remain at the same level as it currently is.

Meta's day-to-day expenses are "crazy", according to research firm Bernstein. "Given that they expect headcount by year end 2023 to be flat...investors feel betrayed after recent commentary about moderating operating expenses growth."

"We're incredibly frustrated to see expenses balloon with an almost total disregard for investor expectations. Super-voting rights are fine when times are good, but we're left asking whether there are any checks and balances," the company added.

The social media giant said on Wednesday that it had "increased scrutiny on all areas of operating expenses."