Zuckerberg loses $16 billion in record Facebook fall

28 July, 2018, 19:48 | Author: Kathy Ellis
  • Facebook shares sink 8% as Q2 revenue and user growth misses analyst estimates

Much of the latest drop in value has come from Facebook insiders selling more than $4bn worth of stock since details of the Cambridge Analytica data-mining scandal surfaced. Mobile advertising revenue is also up, and now represents 91% of advertising revenue for the second quarter of 2018, which is up from approximately 87% of advertising revenue in the second quarter of 2017.

"High expectations can be a remarkable burden, and the reaction is often brutal when they are missed, but the revenue miss was slight, and $13.2 billion is not to be sniffed at".

Chief financial officer David Wehner startled analysts by saying the company faced a squeeze on its business that could last years.

The slump is the biggest drop in market capitalisation in history - far exceeding Intel's $91bn single-day loss in September 2000.

Facebook itself could be set for its worst day in six years as a public company as its stock dipped 20.4 percent to $173.20 in premarket trading.

Company shares fell 19 percent Thursday. Overall, average daily users increased 11 per cent from the period a year earlier. "It's the F in FAANG, but what's to say that, 10 years from now, Facebook isn't the next Myspace and something else has taken its place?"

Other big investors of Nasdaq-listed Facebook also took a hit as disappointing second-quarter results obliterated US$119 billion of market value, the most ever in a day for a U.S. company.

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At the same time, it could be an indication that the appeal of Facebook is slowly wearing thin, especially following all the privacy issues it has recently suffered.

He cited currency fluctuations and a shift in usage to features where Facebook shows less advertising or charges less due to lower demand.

The company also said revenue growth from emerging markets and the company's Instagram app, which has been less affected by privacy concerns, would not be enough to fix the damage.

"Unlike Netflix, whose quarterly shortfall we saw as temporary, here we see an evolution of the story, albeit a portion of which we expected", said Daniel Salmon, analyst at BMO Capital Markets.

Facebook's tumble led a sell-off in technology companies and pushed the Nasdaq down more than 1 per cent, the index's biggest one-day drop in a month, while industrial stocks rose after the United States and the European Union said they would negotiate on trade. Commercialisation of those apps is nascent.

Social media giant, Facebook is losing users, new figures released by the company revealed.

"The company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter", said Gene Munster of Loup Ventures.

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