Meta's huge share price drop shakes world tech stocks

Facebook owner Meta Platforms found itself in an alternate reality Thursday, as shares of the company fell as much 26 percent, dragging down the entire U.S. stock market and spilling over into Europe, where tech stocks posted some of the steepest declines and sent a ripple effect across global financial markets.

Meta was set to lose a fifth of its market value, erasing about $200 billion, which would shave off nearly a full percent from the Nasdaq Composite index's market value and about 0.5% from the S&P 500.

The huge drop followed a dismal forecast from Meta, which blamed Apple's privacy changes and increased competition from rivals like TikTok.

The company formerly known as Facebook also reported a decline in daily active users from the previous quarter for the first time ever.

"Facebook was an unmitigated disaster."

Wedbush Securities Managing Director Daniel Ives.

"I think Facebook has a Mount Everest-like battle, an uphill climb to get back to growth, and because what we're seeing on the digital advertising side, the privacy issues, TikTok competition. You know, this is a company, they change their name, but the strategy and the motivation continues to be social media. And this is a dark phase in terms of what we saw from the quarter."

The so-called FAANG stocks including Facebook, Amazon, Apple, Netflix and Google's Alphabet has seen around $400 billion in market value disappear in the opening weeks of this year, as investors expect policy tightening from the Federal Reserve to erode the industry's sky-high valuations.

The disappointment over Meta's earnings and the subsequent stock drop called to mind the bursting tech bubble of 2000.

If Thursday's losses hold, the decline would mark the the social media giant's worst one-day loss since it went public in 2012.