Facebook is sued after stock plunge 'shocked' market

28 July, 2018, 19:50 | Author: Natasha Holloway
  • MarketWatch

The company's user base flatlined in its biggest market, the US and Canada, at 185 million daily users, while declining 1% in Europe to 279 million daily users.

That could be down to the drop being a one-off, potentially following the Cambridge Analytica data sharing scandal, or even the sharing of private posts belonging to some 14 million Facebook users, rather than a downward spiral for Facebook.

The collapse is a direct result of the news that Facebook lost three million users in Europe alone thanks to the revelation around Cambridge Analytica's far-reaching gaze over user profiles.

Zuckerberg's status as one of the wealthiest men on the planet is dropping, and so is his company's worth.

Facebook has recorded the biggest fall in corporate history as its value plunged by $120bn, when markets opened in NY.

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

Shares traded 19% lower on Thursday, wiping out $US120 billion ($AU162.6 billion) in market value. It reported revenue of $13.2 billion for the quarter, missing Wall Street estimates and rattling investors.

"Given this more cautious outlook, we are lowering our estimates and reducing our price target to $205 from $225", Monness Crespi Hardt Analyst Brian White announced Thursday in an investor note, according to Fox News.

At one point, the company's stock was down almost 24%, and its valuation had fallen by a whopping $148 billion. "As such, we would be aggressive buyers of the stock on weakness this morning".

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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 shares jumped to a new record after it reported that its quarterly profit soared past US$2b, trumping analysts' expectations, as its online shopping, cloud computing and advertising businesses continued to grow.

Facebook shares fell another 0.8 percent on Friday, closing at $174.89 on the Nasdaq.

When people sign up with Facebook, they usually make a huge amount of data available to the group. The number of active users globally was also up.

The problem: weaker-than-expected revenue growth, Facebook's first such miss since 2015.

Looking at some of history's other notable one-day share slams, Intel lost about $US91 billion on one September day in 2000 in the depths of the tech bust.

Before today's massive loss, Facebook's largest single-day drop came in July 2012 when it shed 11 percent.

The new laws were only in effect for one month of the quarter, which means the company may feel more of an impact in the current quarter.

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