Sunday, 19 August, 2018

$168 billion lost in a day: Facebook's plunge could rewrite history

Facebook CEO Mark Zuckerberg Facebook CEO Mark Zuckerberg
| 28 July, 2018, 19:51

Facebook lost about $130 billion in market value in just two hours, its steepest stock decline ever, after warning of slowing sales growth.

The plunge in Facebook shares dragged global tech stocks lower - even though the social media giant's shares had peaked at an all-time high only this week.

The complaint filed by shareholder James Kacouris in Manhattan federal court accused Facebook, Mr Zuckerberg and Chief Financial Officer David Wehner of making misleading statements about or failing to disclose slowing revenue growth, falling operating margins, and declines in active users.

Facebook's valuation stood at $630 billion at Wednesday's closing bell. I saw them sprawled out across airports recently when I traveled, and it was definitely weird to see them.in-person, letting me know they're protecting my data more, on my phone. all while I know they don't. Their median target price is $219.30. "In our view, the sell-off is overdone and largely unwarranted".

Facebook Chief Financial Officer David Wehner said on a conference call with investors that Facebook is "putting privacy first" after the Cambridge Analytica scandal triggered a wave of frightful press, customer angst and regulatory scrutiny around the world.


The revenue guidance from the company was "unprecedented", said Gene Munster, an analyst at Loup Ventures, in a note to investors. Quarter after quarter, Facebook has been a remarkably reliable growth machine.

In addition, the company expects to invest in products like Stories "that now have lower levels of monetization", while the introduction of new controls for users to limit their data-sharing with Facebook "may have an impact on our revenue growth", the CFO said. When UK regulators issued the largest fine they could against the company as punishment for the Cambridge Analytica data scandal, the tab amounted to £500,000 ($655,000), chump change for a company that brings in $40 billion a year. The report also predicted far weaker growth in the future than had been expected. Like Facebook, Instagram depends on ads to generate revenue, and Stories is supposed to help sell more ads. "That's going to have a negative impact on revenue growth", he noted. Yet both categories are facing headwinds.

And Facebook warned that 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. Amazon.com Inc fell 2.8 percent ahead of its own results report later on Thursday.

So is it time to unfriend Facebook? All investments can fall as well as rise in value so you could get back less than you invest.

Richard Greenfield of BTIG Research said he remained upbeat on Facebook despite the abrupt forecast shift.

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