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Meta Platforms META recently announced that it is discontinuing its cryptocurrency wallet pilot project — Novi. In a recent post, the company stated that both the Novi app and Novi on WhatsApp would not be available from Sep 1, 2022.
This is a major setback for Meta Platforms in its efforts to develop Metaverse as an independent commercial platform as both the crypto and NFT market came crashing down. Customers will be unable to add funds from July 2022 to their Novi wallet and are advised to withdraw funds before September 2022.
The Novi crypto wallet was initially launched as a pilot program in October in Guatemala and select areas of the United States. It had custody support from Coinbase Global and Paxos stablecoin USDP.
However, despite the custody support of Coinbase, which is the largest U.S. cryptocurrency exchange trading some 50 different digital assets, the market scenario and volatility have forced Meta Platforms to shut its operations for Novi.
The closure of the digital payments project marks the end of Meta Platforms' venture into the crypto market.
Previously, Meta Platforms' Diem cryptocurrency was shelved even before it commenced operations as several high-profile partners bailed out due to increasing scrutiny from lawmakers and financial regulators on the company.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta's Metaverse Ambitions Take a Hit Due to Volatility
Meta Platforms is currently facing the worst downturn in the company's history due to the global macro-economic situation, geopolitical tensions, rising inflation and FED interest rate hikes.
Amid such market volatility, the company intends to make its way out of the crypto market at the moment. Meta Platforms' revenue growth was driven exponentially by the e-commerce boom amid the pandemic, which in turn has been funding its Metaverse dreams.
However, it was momentum growth and is finally slowing down. Meta's revenue growth has been significantly impacted by the Russia-Ukraine war, which can be described as a black swan event.
This kind of negative global geopolitical situation and inflation, which the war has aggravated, have hurt the company's stock price.
Shares of Meta Platforms, which currently has a Zacks Rank #4 (Sell), have tumbled 49.8% in the year-to-date period compared with the Zacks Internet – Softwareindustry decline of 48.6%.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The situation is not expected to get better in the near term as negative sentiments are evident with traders shorting shares of every major tech stock in the NASDAQ composite, including Meta Platforms' tech peers, who are looking to venture into the Metaverse, including Twitter TWTR, Microsoft MSFT and Apple AAPL.
Microsoft shares have lost 22.9% in the year-to-date period compared with the Zacks Computer-Softwareindustry's decline of 25.9%.
Apple's shares have fallen 20% in the year-to-date period compared with the Zacks Computer - Mini computersindustry's decline of 19.7%.
As a result of the current market volatility, traders and investors are bearish regarding the cryptocurrency markets. The global crypto market cap shrunk to $977 billion after touching the $3-trillion mark in November last year. The price of almost every major cryptocurrencies like Bitcoin and Ethereum is now worth half or even less than their all-time highs.
Even though Meta Platforms' short-term growth looks tepid, the company's decision to stop certain investments that are costing it huge amounts of money is in alignment with its long-term growth.
Meta Platforms is currently looking to increase its revenues from its Family of Apps business segment, which will fund the growth of its Metaverse.
As a result, Meta has been investing heavily in developing AI, which is expected to drive revenue growth across the ad business.
As Meta bets on building the Metaverse for the future, investment in AI is expected to bring lofty ROI for the company and separate its services from competitors. This will help the company regain lost market share in the long term.
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