Their share price would just update to reflect their position. The market isn't going to punish a company for declining, just price a company based on current position and future prospects. It is the nature of companies to grow, stagnate, decline, and fail.

Right now Meta has product offerings (Horizon Worlds), they have an app store, and they make their own hardware. I find their product offering to be bad, but their app store and hardware are fine. Valve has made plenty of money over the years by owning just an app store alone. I think Meta is still a world leader owning the store and the hardware even if their product offering is middling. Being able to innovate on the hardware end gives them great leverage on what features applications use, the ability to influence AAA studios and indie devs alike. This will eventually stop if VR hardware becomes commoditized, but that's not happening any time soon if it ever does. And if Meta does win the product battle then there's even more value to profit from.

And not being a world leader won't tank their stock or somehow erase the company. There's still real earnings/value to be had in VR and they're early in the space. As long as the space as a whole is successful and Meta stays a part of it, they'll continue to receive revenue which will continue to drive stock growth. They might not forever stay a behemoth, but they're not going anywhere any time soon.