Facebook Shares Sink; Further Growth Drops Expected

Facebook Shares Sink; Further Growth Drops Expected”

Shares in Facebook tumbled 19 per cent on Thursday on the United States' Nasdaq exchange to close at US$176.26 ($259.80) after sales and growth forecasts reported a day earlier, after normal trading closed, disappointed investors.

The Facebook founder still owns a 13 percent stake in the company, but the slump in share price saw more than $12bn wiped from his net worth in just 24 hours.

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.

Facebook's daily active users for the second quarter of 2018 were effectively flat in the USA sequentially, and even declined in Europe compared with Q1 - marking the first time the company has seen such a decline in recent quarters. Those European privacy regulations, known as the General Data Privacy Regulation, or GDPR, went into effect with just one month left in the second quarter. Combine this pessimistic outlook with 1.54% user growth and 1.44% daily active users which are half of last quarter's growth percentage and we're looking at a company that is getting squeezed at both ends. The company's shares also took a sharp hit in the days following the revelation that Cambridge Analytica had illegitimately gained access to the personal data of tens of millions of the company's users.

Many had come to consider Facebook nearly immune to image problems, especially after the most recent scandal involving the British company Cambridge Analytica.

Paul Packer, who chairs the U.S. Commission to Preserve America's Heritage Abroad, an independent government agency, wrote to Zuckerberg calling for major changes to Facebook to keep white supremacists and Holocaust deniers off the platform.

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

"We plan to grow and promote certain engaging experiences like Stories - that now have lower levels of monetization - and we are also giving people who use our services more choices around data privacy, which may have an impact on our revenue growth", Wehner explained to associates, according to the Fox News report. In light of increased investment in security, we could choose to decrease our investment in new product areas, but we're not going to - because that wouldn't be the right way to serve our community and because we run this company for the long term, not for the next quarter.

Total revenue rose 41.9 percent to $13.23 billion.

Not only that but Facebook has had concerned citizens of the world question its privacy, data collection, and its stance on fake news, and hate speech.

According to the research firm eMarketer, Facebook is expected to hold an 18 percent share of the $273.29 billion worldwide digital ad market, behind Google's 31 percent.

Facebook's value recently tumbled more than $100bn.

"The company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter", said Gene Munster of Loup Ventures.

Before the results were announced, Facebook's shares had closed in NY at $217.50, a record high, and had gained 23% this year.

Some analysts, however, believe it's more than that.

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