Facebook is sued after stock plunge 'shocked' market

Zuckerberg loses $16 bn as Facebook shares plunge after profit warning

Facebook shares sink 8% as Q2 revenue and user growth misses analyst estimates

The company posted $13.23 billion in revenue for the second quarter, missing estimates of $13.36 billion.

Facebook has been rocked by a series of privacy and data-related scandals over the last few months, and investors were clearly unhappy by what the company's chief financial officer had to say yesterday.

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

Facebook shares fell another 0.8 per cent on Friday, closing at US$174.89 on the Nasdaq.

Other prominent social media slid Thursday afternoon. Other large tech firms didn't take any cues from Facebook: Alphabet shares rose 0.8 per cent and Apple slipped only 0.3 per cent. Amazon fell 3 per cent, but recovered those losses after hours Thursday after issuing a strong quarterly earnings report. Though Facebook-specific global DAU rates were up 11 percent year over year - with growth led through users in India, Indonesia and the Philippines - it was less than Wall Street was projecting.

After a surprisingly weak growth forecast in this week's earnings report, Facebook's stock price dropped 19 percent today.

"Facebook generated $13.23 billion in second-quarter revenue - up 42 percent year-over-year - though it missed analysts' estimates at $13.36 billion", Ciaccia noted.

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

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Of the newer endeavors, Instagram's business model is the most mature, and likely contributed meaningfully to revenue in the quarter, analysts have said.

The new $10 million bump works out to an extra $27,000 a day Facebook is spending on protecting its chief.

"Facebook is actively choosing to make less money, deprioritizing near-term monetization to drive engagement to even higher levels to capture even more of their 2.5 billion monthly users' time and attention", he wrote. Commercialisation of those apps is nascent. For example, Google was able to wow investors this quarter even though the recent European Union fine destroyed operating margins, dropping them from 24% to 9% for Q2 2018.

For founder Mark Zuckerberg, the loss came to nearly $16 billion, according to Forbes, which tracks billionaire wealth in real time.

In Q2, Facebook's total revenue growth rate dropped about 7 percentage points compared with Q1.

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.

The threat of additional privacy regulatory setbacks remains a concern, according to analysts.

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