Meta Platforms has given back 21% from the all-time high it set late last year, leaving investors once again weighing whether Mark Zuckerberg’s biggest bets will pay off. The stock is also down 4% this year, even after years in which big pullbacks eventually gave patient buyers strong returns.
That is why Meta is being watched closely now. The company has faced several challenges over the past 12 months, and its first quarter brought a sequential decline in daily active users across its website and apps, a reminder that even a fast-growing platform can lose momentum. For shareholders, the question is whether the current drop is another buying opportunity or the start of a more expensive reset.
The pattern is familiar. Between July 1 and Dec. 31, 2018, Meta’s stock fell 32%. It dropped 30% between mid-February 2020 and late March 2020, then tumbled 75% between September 2021 and October 2022. In each case, the stock later outperformed the S&P 500 for investors who bought near the bottom, which is why the latest decline is drawing so much attention from people trying to judge whether history is about to repeat itself.
But the case for a rebound is not simple. Meta’s results have often been strong, including solid earnings-per-share growth in 2023, yet they have not always been strong enough to calm fears about the company’s heavy capital spending. Zuckerberg first went all in on the metaverse, a push many investors saw as unlikely to deliver a meaningful return, and then shifted Meta toward artificial intelligence. The company declared 2023 its “year of efficiency” and cut costs sharply by laying off many employees, even as AI-powered tools began helping lift engagement on its apps and improve the value it offers advertisers.
That mix of better operating results and bigger spending is the friction point now. Meta has already shown it can recover from deep selloffs, but it has also shown how quickly confidence can erode when investors are not convinced the spending will translate into durable returns. The stock’s slide leaves that unresolved, and until the company can show that its latest wave of AI investment is paying off, the market is likely to keep treating every strong quarter as only part of the answer.
