Facebook market value shrinks by $119 billion in biggest single day loss

Jul 27, 2018, 10:43
Facebook market value shrinks by $119 billion in biggest single day loss

Until now, no company in the history of the US stock market has ever seen $100 billion of its market value get vaporized in a single day. Overall, Facebook grew its global users by 11 percent from the same time a year ago.

"Our total revenue-growth rates will continue to decelerate in the second half of 2018, and we expect our revenue-growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4", he said.

But the number of people who use the network every day, representing Facebook's most devoted users, remained flat in the USA at 185 million. It went into effect in May and gives Europeans more control over their personal data.

Overall, technology giants - Facebook, Apple, Google, Amazon and others - have enjoyed nearly unprecedented growth in revenue and stock price for years.

On Wednesday the initial fallout from Cambridge Analytica appeared in Facebook's financial results and forecast and it was a game changer.

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The report, which marked Facebook's first full quarter since the Cambridge Analytica scandal, startled investors with a bevy of red flags about setbacks to its revenue and user growth.

Chief executive Mark Zuckerberg said the tech giant has been investing heavily in "safety, security and privacy" after being rocked by concerns of manipulation of the platform and the hijacking of user data. The new regulations are also affecting user growth in the region because of the impact of requiring consumers to opt-in to Facebook and to linking their accounts to third-party websites, Pachter said. Quarter after quarter, Facebook handily beat sales and profit estimates by Wall Street analysts.

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According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate $8.06 billion in worldwide ad revenue this year.

Facebook missed projections on revenue and global daily active users this quarter after struggling with data leaks and fake news scandals.

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Shares closed down nearly 19 percent, at $176.26.

"I think many investors are having a hard time reconciling that deceleration", Brent Thill, an analyst at Jefferies LLC, told Facebook executives, asking for a little more clarity on the reasoning.

"T$3 he fundamental damage to the Facebook platform has been "very contained" in our opinion and is generally better than feared from the white-knuckle period a few months ago", he added.

Despite the rocky quarter, Facebook shares had hit an all-time high before Wednesday's earnings report and its quarterly revenue was still up 42 percent from this time previous year.

Siva Vaidhyanathan, a media studies professor at the University of Virginia and author of the new book, "Antisocial Media: How Facebook Disconnects Us and Undermines Democracy", dismissed the significance of the stock plunge.

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The "Dispatches" show featured an undercover reporter who went to work at Irish staffing firm CPL Resources, which acts as Facebook's largest centre for United Kingdom content moderation.