Saturday, 22 September, 2018

Facebook Suffers Huge One-Day Drop in Market Value

Amazon Earnings Skyrocket on Cloud Computing Advertising Facebook Suffers Huge One-Day Drop in Market Value
Jodi Jackson | 28 July, 2018, 19:47

While it is true that Facebook's loss of $119 billion in a day is the biggest one-day drop in US stock market history, it should be noted that the large loss is partly due to Facebook's massive valuation as a company. "ORCRP0017763-topic.html">WhatsApp and Instagram. But the number of American users who use Facebook every month has flatlined, the company reported, raising questions about how much longer the social network can continue to expand in the US market.

The company - which later admitted that even more users' data had been released than first reported - suspended hundreds of apps as part of a subsequent investigation.

He subsequently backtracked from this comment after it triggered widespread public outcry.

"Earlier this week, the company was slammed by the parents of a Sandy Hook massacre victim for the hoax claims that emerged on the platform", Fox News reported. "Facebook has also been sucked into the probe into alleged Russian meddling in the 2016 presidential election". That means Facebook could feel its effects more strongly later this year. The social media company has contended for years with criticism about its content policies, its failure to safeguard private data and its changing rules for advertisers.

In the wake of the Cambridge Analytica data-privacy scandal, "Legal/regulatory developments have led to changes meant to support FB's platform and users, but they will notably restrain growth and profits for at least the next couple of quarters, in our opinion", Scott Kessler of CFRA Research wrote in a note.

Zuckerberg has been struggling to right the ship for months following a string of privacy-related scandals; pledging to crackdown on "fake news", racism, and foreign meddling in the U.S. election system.

It's official. Facebook just had the biggest stock market wipeout in American history.

During the call, Facebook Chief Executive Mark Zuckerberg tried to recast the disappointing earnings.

Zuckerberg, Facebook's CEO, lost $16 billion in net worth due to the drop, according to Fox News.

"It's going to be hard for markets today with such a massive market cap stock down so much".

That "bombshell", as one analyst termed it, played into concerns on Wall Street that Facebook's model could be under threat after a year that has been dominated by efforts to head off concerns over privacy and fake news.

The loss of stock value bumped Zuckerberg from number four down to number six - six! - on Forbes' ranking of the World's Billionaires, behind Spanish fashion magnate Amancio Ortega and Warren Buffett.

He said: "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". Its $1.74 earnings per share beat expectations of $1.72.

Facebook shares fell another 0.8 percent on Friday, closing at $174.89 on the Nasdaq. They believe users have woken up to Facebook's growing list of controversies and chose to vote with their "Log Out" buttons.

Toward the end of the call, a Jefferies analyst seemed astonished at the scale of the growth slowdown, saying it "seems the magnitude is beyond anything we've seen". "As we have written about extensively, the advertising industry - and digital advertising no less - has limits to growth, which we think is the primary factor constraining Facebook's revenue opportunity".

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