Meta, Facebook’s parent, has seen a significant drop in its market valuation since it reported nearly $1trn capitalization for the fourth quarter.
On Tuesday, the company’s shares dropped 2.1% to close at $220.18, making it 35% down this year and its lowest since July 2020. The drop has pushed Meta value below chipmaker Nvidia, which is now the seventh most valuable company in the US.
Not long ago Facebook was among the five most-valuable US companies, alongside Big Tech peers Apple, Microsoft, Amazon and Alphabet. However, Meta has since fallen to eighth, below Tesla, Berkshire Hathaway and now, for the first time, Nvidia.
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On Tuesday, Meta’s market cap dropped to $599 billion, while Nvidia closed at $627 billion. Visa is next at $478 billion. The chip maker’s failure to purchase Arm did not affect its shares.
Nvidia announced overnight that it was ending its effort to buy chip technology firm Arm and would pay a breakup fee of $1.26 billion to Arm parent SoftBank. Nvidia scrapped the deal amid hefty regulatory challenges, including a probe in the U.K. and a lawsuit from the U.S. Federal Trade Commission.
Nvidia rose 1.5% on Tuesday to $251.08, and has been on a tear over the past two years, soaring over 300% since the start of 2020. The company has lost about 15% of its value since the start of the year as investors have sold out of risky tech stocks.
Nvidia, which reports fourth-quarter earnings 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.
The company showed a drop in user numbers and warned about challenges ahead from Apple’s privacy changes. Meta’s first-quarter forecast missed estimates, sending the stock down a record 26% on Thursday.
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Nvidia has recently made a bit of a come-back in terms of share price. The chipmaker made a whole bunch of cash in its final quarter of 2021, with gains up 50% year-on-year revenue, operating income up 91%, net income up 84% and massive margin gains.
Nvidia was founded in 1993 by three engineers: Jensen Huang, leather-clad company CEO; Curtis Priem, who retired from Nvidia in 2003; and Chris Malachowsky, who still works at Nvidia as a senior technology executive. The company has scaled through fierce competition with rivals such as Intel and TSMC to become now the seventh most valuable company in the US.
Meta still has a mountain of challenges to contend with as watchdogs around the world introduce strict rules around consumer privacy. The social media company has threatened to leave Europe if regulators enact rules that will stop it from sharing private data of users in Europe with the US. Though the rules are still under consideration, Germany and France said it will be a good thing if Meta makes its threat true.