After a tough 2022, when the impact of rising interest rates worried investors, the US tech giants' share prices are back in the ascendancy this year – and the rollercoaster ride has been particularly wild for Meta (US:META). In the first nine months of 2022, its share price fell by 70 per cent; over the past nine months, it has trebled in value. Having touted the merits of the metaverse last year, Mark Zuckerberg's business is now riding the artificial intelligence (AI) wave. But do the shares of what’s arguably the most divisive of the big tech players still warrant investor interest?
The second phase of the business’s life began in October 2021, when Zuckerberg announced that he would be rebranding Facebook as Meta. At the time, the pandemic was forcing everyone to work, shop and socialise at home. If ever there was a perfect environment created for an online social networking business to succeed, it was this one. At $323 (£252) a share, the company’s market value was up 70 per cent over the past two years. It seemed as though there was little that could go wrong, but the fall wasn’t far away.
It was the publication of annual results for 2021, released in March last year, that confirmed investors had lost faith in Meta’s growth story. Issues had been bubbling for some time: user growth was slowing, the virtual reality division was losing an increasing amount of money and Apple’s (US:AAPL) incoming privacy rules were about to upend Facebook’s advertising model. Fourth-quarter figures brought things to a head. Reality Labs, the virtual reality division that forms the centre of the company’s metaverse plans, was still losing billions of dollars, while for the first time ever Facebook users declined month on month.