Finance

FACEBOOK FAIL: Zuckerberg Loses $16 BILLION in FIVE MINUTES as Shares PLUNGE

FACEBOOK FAIL: Zuckerberg Loses $16 BILLION in FIVE MINUTES as Shares PLUNGE

Facebook's value was down by $111bn when Wall Street opened on Thursday, one of the most dramatic share price declines in history, after the social networking firm reported slowing growth in user numbers following a string of recent scandals.

Facebook shares were down as much as 19.6 percent at $174.78 in early trading, a decline that would wipe about $124 billion off the company's value - or almost four times the entire market capitalization of Twitter Inc.

But while the slump may be a good buying opportunity, it didn't take Facebook into the red for the year.

"We continue to focus our product impact on putting privacy first, and that's going to have some impact on revenue growth", said Facebook chief financial officer David Wehner on the earnings call. Wednesday's drop has shares trading at levels seen just before a data-privacy scandal surrounding the firm Cambridge Analytica and its role in Russian interference in the 2016 U.S. presidential election surfaced.

Splash page for the Internet social media giant Facebook. The company did manage to squeeze more money out of each person, with the all-important Average Revenue per User (ARPU) increasing to $5.97.

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.

In this March 29 photo, the logo for Facebook appears on screens at the Nasdaq MarketSite in New York's Times Square. Technology companies account for six of the 10 biggest companies in the S&P 500 Index.

Facebook had 2.23 billion monthly users as of June 30, up 11 percent from a year earlier, but well short of what industry analysts had been expecting.

Normally, a drop that steep in a company so high profile would bring out bargain hunters, investors who see the opportunity for a quick profit in a popular stock.

And things are about to get worse. It reported second-quarter results on Wednesday afternoon. That means Facebook could feel its effects more strongly later this year.

Mobile advertising revenue represented approximately 91 per cent of advertising revenue for the second quarter of 2018 - up from approximately 87 per cent of advertising revenue in the second quarter of 2017.

"We've taken strong steps to address a number of issues, including election integrity, fake news and protecting people's information", she said. The company is quick to externalize blame for this, pinning its expectations for the decrease on currency markets projections and pesky privacy-enhancing regulations like GDPR.

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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