Shares of Meta, Facebook’s parent company, have been losing momentum since the start of 2022. The company has already fallen nearly 35%, ending Tuesday with a market cap of less than $600 billion for the first time since May 2020. Most of the drop follows Meta’s disappointing earnings report last week and falling Facebook user numbers. Meta is now worth less than graphics processing unit (GPU) maker Nvidia, which was valued at just over $627 billion as of Tuesday.
Meta never seems to be short of negative headlines. With numerous congressional hearings, damning whistleblower reports and now fears of a decline in user growth, the company’s action has had its share of impacts. Meta continued to fall on Tuesday, and the stock has plunged so much over the past week that the company is now worth less than chipmaker Nvidia. Note that the action of Nvidia has experienced a slight decline recently after the equipment manufacturer announced that he was officially withdrawing from negotiations to buy ARM for 40 billion dollars.
Nvidia announced on Monday that it was ending its efforts to acquire chip technology company ARM and would pay a $1.26 billion severance fee to Japan’s SoftBank, ARM’s parent company. Nvidia backed out of the deal due to significant regulatory challenges, including an investigation in the UK and legal action of the United States Federal Trade Commission (FTC). In addition, many ARM customers have also protested the takeover, alleging that when the deal ends, Nvidia could potentially become both a supplier and a competitor to ARM licensees.
On Tuesday, Meta stock fell 2.1% to close at $220.18. The stock has lost 35% this year and is trading at its lowest level since July 2020. Thus, Meta’s market capitalization was $599 billion on Tuesday, while Nvidia closed at $627 billion. The Visa group was next at $478 billion. Nvidia was up 1.5% on Tuesday, to $251.08, and has seen a surge over the past two years, exceeding 300% since the start of 2020. The company has lost about 15% of its value since the start of 2020. beginning of the year, investors having sold risky stocks.
Nvidia, which is expected to release its fourth quarter results next week, has been boosted by strong chip sales as its graphics processors are in high demand for artificial intelligence applications and advanced video games. Meta, on the other hand, has been down since announcing its Q4 2021 results last Thursday. The company recorded a drop in user numbers and warned of upcoming challenges with the changes contributions by Apple regarding privacy. Meta’s Q1 forecast missed estimates, sending the stock down 26%.
However, some analysts believe that Meta’s sharp drop in market capitalization could have an advantage for the tech giant: the ability to circumvent the new antitrust liability. The $600 billion market capitalization figure also happens to be the number that House lawmakers have chosen as the threshold for a “covered platform” as part of a package of competition bills in the United States. designed specifically to target Big Tech. If Meta were to stay below this threshold, he could avoid being hit by the bills’ provisions.
It could take some time for any of the bills to become law, if at all. The text could still be changed and, even in their initial version, the bills would continue to apply to the platforms for a certain time after they fell below the market capitalization threshold. A US Senate bill that recently passed the Judiciary Committee actually uses a lower market capitalization threshold than its House counterpart, $550 billion.
This milestone nonetheless highlights one of the challenges of crafting laws aimed at the technology sector. In addition to ensuring that bills do not solve problems that are outdated by the time they are passed, legislators must try to encompass a narrow group of businesses.
One bill that could have a significant impact on Meta, if it is deemed a “covered platform” upon passage, is the “Platform Competition and Opportunity Act”. This bill, originally introduced by Rep. Hakeem Jeffries, DN.Y., and his counterpart introduced by Sen. Amy Klobuchar, D-Minn, would make it harder for “covered platforms” to acquire young potential rivals. .
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