Global Diversification: Indian investors sniff buying opportunity in Meta shares after $200 bn wiped out last week

Indian investors in overseas equities have sniffed a buying opportunity in Meta shares which saw $200 bn getting wiped out last week. Facebook-owned company's shares saw a historic loss of wealth and the investors back home are lapping the opportunity with buys on dips.  

Meta stock fell 26 per cent last week erasing more than $200 billion in the biggest ever single-day market value wipe-out for a US company, said a Reuters report.

That pulled down founder and Chief Executive Officer Zuckerberg`s net worth to $85 billion, according to Forbes – the report added.

Zuckerberg owns about 12.8 per cent of the tech behemoth formerly known as Facebook.

After the record plunge Indian investors are buying into the fall, data from Vested – a platform for Indian investors to invest in US stocks.

“Meta is quite popular among Indian investors, more than 4.6% of Vested users hold the stock as of today. Last week, Meta was the top stock bought on the Vested platform,” Viram Shah, Co-founder & CEO, Vested Finance, said.

“Data shows that investors are buying into the dip. As of 2nd February 2022, only $1,000 worth of Meta was bought on the platform on a net basis. On 3 February 2022, that number jumped 2000 times. This was led by a lot of investors buying into Meta while selling volumes were small,” he added.

What Led to The Fall?

Meta reported a decline in daily active users from the previous quarter for the first time as competition with rivals like TikTok, the video-sharing platform owned by China's ByteDance, heats up, highlighted the report.

Meta forecast first-quarter revenue in the range of $27 billion to $29 billion. Analysts were expecting $30.15 billion, according to IBES data from Refinitiv.

There were several reasons why Meta shares plunged by more than 26% on 3rd February. “First, there was a weaker than expected forecast of revenue growth in the next quarter and a first-ever quarterly decline in the number of daily active users,” says Shah of Vested Finance.

“Metaverse division, which the company is betting on, lost $10 billion in 2021 as it builds out this new business,” he said. The company also said that it was majorly being affected Apple’s iPhone privacy changes that would cost it over $10 billion in lost sales this year, Shah added.

Meta, owner of the second-largest digital ad platform in the world after Google, reported 2.91 billion monthly active users in the fourth quarter, showing no growth compared with the previous quarter, Reuters data highlighted.

Experts feel that the fall in Meta share is natural as it would be unfair for a company to gain user quarter-on-quarter. Going forward India would also play a very important role on growth of users.

There are over 350 million Facebook users in India alone, an October report from Statista showed, followed by US that has 193 mn, and Indonesia which has over 142 mn.
 
“The decline in Meta is a natural consequence of the company’s unprecedented growth. It’s an unrealistic expectation for the platform to gain users at the same momentum indefinitely,” Nikhil Kamath, Co-founder, True Beacon and Zerodha, said.

“India is Facebook’s largest market, in terms of the number of users so it’s obvious how India would play a major role in how this plays out for the global market,” he said.

(With inputs from Reuters)

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)