Jim Cramer suggested earlier this year that shares in Facebook parent Meta would go up. Today, he said he’s sorry.
In early June, the colorful host of CNBC’s Mad Money told investors that Meta shares had “nowhere else to go but up.”
Today, he apologized for his bad call following Meta’s quarterly earnings announcement Wednesday evening, which entailed a disappointing quarterly revenue outlook. On Thursday, Meta shares fell 25%, their biggest one-day drop since February. Investors have pushed the stock down more than 70% this year.
“I made a mistake here. I was wrong. I trusted this management team. That was ill-advised,” Cramer said in a somber tone on CNBC. “The hubris here is extraordinary, and I apologize.”
Morgan Stanley downgraded Meta’s shares for the first time on Thursday, as did Cowen and KeyBanc Capital Markets. Morgan Stanley analysts said they expect the company’s free cash flow to slump by 60% in 2023 and slashed their price target by nearly half.
As the owner of Facebook and Instagram, Meta remains a juggernaut in social media. But under the direction of CEO Mark Zuckerberg, the company is investing enormous amounts of time, energy, and money into the metaverse, a virtual reality universe that it’s warned could take years to pay off, assuming it ever does.
“There’s still a long road ahead to build the next computing platform, but we are clearly doing leading work here,” Zuckerberg said on the earnings call. “This is a massive undertaking, and it’s often going to take a few versions of each product before they become mainstream.”
Palmer Luckey, founder of VR headset maker Oculus, which then-Facebook acquired in 2014, is among many industry observers unimpressed with the company’s main metaverse offering, Horizon Worlds. “I don’t think it’s a good product…It’s not good, it’s not fun,” he said this week at the Wall Street Journal’s Tech Live conference, likening it to a “project car” hobby one ultimately loses money on after significant investments. (Luckey was ousted from Facebook a few years after it acquired his startup.)
Even Meta employees working directly on the project seem to think little of it, with one noting in internal documents, “An empty world is a sad world.” With not nearly enough users sticking around, the company earlier this year announced a “quality lockdown”—no launches of new features—to address bugs and complaints.
Yet Meta invested $10 billion into the metaverse last year and plans to sink a similar amount into it this year. With the company’s other properties also challenged—Facebook and Instagram face strong advertising headwinds and tough competition from TikTok—it’s little wonder many investors are losing faith.
Some observers joked Cramer’s apology today could be a good sign for Meta shares, as he’s gained such a reputation for getting things wrong that “inverse Cramer” became a meme on Twitter. The idea is that an investor can succeed by listening carefully to what he says and then betting on the exact opposite outcome.
They certainly would have done well by doing the opposite of what he said in early February. Cramer was asked on CNBC about Meta’s poor earnings report at that time and if shares dropping in premarket trading was an “amazing buying opportunity” or “some kind of terrible inflection point.” Cramer answered, “I’m going for the former…I have total faith in Mark Zuckerberg.”
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.