Meta’s share price has fallen off a cliff as the market responded viciously to a lacklustre Q3 earnings report from the Facebook parent company.
While the stock price fell just 6% during normal trading hours, at the time of writing Meta is currently down a cringe-inducing 20% in after hours trading, according to data from TradingView.
Meta revealed that its metaverse-focused research division Reality Labs has suffered a US$3.7 billion loss in the third quarter of this year.
Despite the core elements of Meta’s primary businesses showing some signs of strength with major apps like Instagram and Facebook generating US$27.5 billion in revenue, the company fell short of overall market expectations by a whopping 11.3%.
Earlier this week, Brad Gerstner, CEO of Altimeter Capital — a major shareholder in Meta — penned an open letter urging Zuckerberg to reign in his “unjustifiable” spending on the metaverse. Gertsner advised that Meta should “get fit” by slashing its workforce headcount by 20% and limiting metaverse spending to no more than $5 billion a year.
“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”Brad Gerstner, CEO of Altimeter Capital
Meta’s virtual-reality platform, titled Horizon Worlds, has struggled majorly to entice users with less than 200,000 people visiting the platform on a monthly basis. According to internal documents obtained by the Wall Street Journal, complaints of “glitchy technology” combined with “uninteresting” user experiences are consistent across all user feedback.
Crypto venture capital shares in the pain
While Meta suffered spectacularly on its earnings, things over in cryptoland really weren’t faring too much better.
A new report from the Wall Street Journal revealed that the world’s largest crypto and Web3-focused venture capital firm, a16z, had seen its flagship crypto venture fund lose roughly 40% of its total value.
This is a significant contrast to its performance throughout the crypto bull market in 2021. At the end of last year, the crypto fund posted an impressive 10.6X gain on its investments since launching in 2018, solidifying it as one of the best performing funds in a16z’s history.
In Q4 of last year, a16z engaged in 26 crypto-related venture capital funding rounds. This number fell to 17 in Q1 and Q2 of this year. Now that we’re in Q3, data from Fortune reports that they’ve invested in just seven.
Unfortunately for a16z, the bear market seems to be taking its toll as the firm struggles to convince investors that its hefty crypto bets are still a good idea. Most notably, the recent launch of a new Layer one blockchain, Aptos — which a16z holds a $200 million stake in — got off to a bit of a rocky start as its token (APT) collapsed more than 40% on its first day of trading.
Despite the fund’s recent poor performance, Chris Dixon, the firm’s leading partner alongside Marc Andreessen said that he’s not too concerned, saying he still sees the downturn as an opportunity to continue supporting entrepreneurs in the crypto industry.
“What I look at is not prices. I look at the entrepreneur and developer activity. That’s the core metric,” he told the WSJ.