Meta Platforms Has Fallen 21% From Its All-Time High — Here’s What History Suggests Could Happen Next

Meta Platforms has faced renewed pressure over the past year as investors question whether its heavy capital spending on artificial intelligence and other initiatives will generate enough returns. Although the company has continued to post strong financial results, those results have not always been strong enough to fully ease concerns about rising expenses. In the first quarter, Meta also reported a sequential decline in daily active users across its website and apps, adding to the market’s worries. As a result, Meta shares have fallen this year and remain well below their recent peak.

The stock’s decline has raised a familiar question for investors: is this another temporary setback, or a sign of deeper trouble? Meta has experienced several major pullbacks before, and in each case the company eventually recovered. From July to December 2018, shares dropped 32% amid privacy scandals, regulatory scrutiny, and damage to the company’s reputation following the Cambridge Analytica controversy. In that case, Meta faced intense criticism for allowing a third party to collect personal data from millions of users without explicit consent. The situation led to a major fine from the U.S. Federal Trade Commission. Despite the severity of the crisis, the stock later rebounded strongly.

Meta also saw a 30% decline in early 2020 as global markets sold off at the start of the COVID-19 pandemic. Again, the stock later moved higher as the company weathered the broader market turmoil. A far steeper decline came between September 2021 and October 2022, when the shares fell 75%. That drop reflected weakening advertising conditions, including the impact of Apple’s iOS privacy changes and growing doubts about the company’s metaverse strategy.

The common pattern across these declines is that Meta eventually responded by changing course. After the metaverse became a major disappointment, the company declared 2023 its “year of efficiency” and aggressively cut costs, including through large layoffs. That move helped control expenses and supported stronger earnings growth. Meta then shifted its focus more heavily toward artificial intelligence, and that strategy has begun to show clear benefits. AI-driven systems are helping increase engagement across its apps, strengthening the advertising business, while new AI tools are also helping advertisers improve results.

The key argument for Meta is that its enormous user base gives it many opportunities to monetize attention over time. With billions of daily active users, the company can test different business models and adapt when one strategy fails. The metaverse did not deliver the expected payoff, but Meta has shown it can move on and reallocate resources. Its scale, network effects, and switching costs also help protect its dominant position in social media.

For long-term investors, the recent drop may look similar to earlier pullbacks that eventually created buying opportunities. The view presented is that a decline of more than 20% from a recent high can be an attractive entry point for Meta if the company continues to leverage its user base, improve monetization, and shift strategies when needed.