Published: Thu, July 26, 2018
Money | By Ethel Goodwin

Facebook loses $130 bn in just two hour, Zuckerberg $17 bn

Facebook loses $130 bn in just two hour, Zuckerberg $17 bn

Facebook's stock tumbled more than 23 percent in after-hours trading, erasing more than $120 billion in market value in less than two hours.

Facebook's growth is slowing with users in some of its most lucrative markets. Facebook's daily and monthly user counts were up 11 percent year-over-year, confirming that the momentum of its business is still overpowering its PR problems that took place prior to the company publishing these reports.

Facebook has shown that it can not sail forever forward while facing various storms, including Cambridge Analytica and the Russian government's use of the social media platform to sow divisions amongst Americans during the 2016 presidential campaign. The results were among the first signs that the issues had pierced the company's image and would have a lasting effect on its moneymaking machine.

Wall Street didn't take too kindly to that: Facebook's stock price dropped almost 20 percent in after-hours trading.

Facebook's disappointing second-quarter performance marks the first full quarter since one of its biggest scandals to date.

Profit was up 31 per cent in the second quarter at US$5.1 billion; revenues rose 42 per cent to US$13.2 billion, slightly below most forecasts. Analysts were generally expecting earnings-per-share of $1.72 on revenues of $13.3 billion.

Facebook Inc.'s scandals are finally hitting the company where it hurts the most, its growth.

Chief financial officer David Wehner triggered the selloff when he said sales growth would continue to slow through the rest of the year.

But he added that "we run this company for the long term, not for the next quarter".

Facebook's daily active users in Europe declined by 3 million amid the new regulation.

Revenue increased 4% to $13.2 billion in the quarter. He crowed about Instagram, calling it an "amazing success" and said he believed that the unit grew twice as quickly under Facebook than it would have.

After these events, several senior leaders have departed Facebook, including a board director, its chief information security officer, and its vice president of communications, marketing and public policy.

However, as usual, Wall Street analysts come to the defense of Facebook stock on any pullback whatsoever.

Facebook is now gearing up to face one of its biggest tests to date: ensuring that no one meddles in the 2018 midterm elections through the social network. The company said headcount was 30,275 as of June 30 - an increase of 47 percent year over year. Currently, it is the fifth largest company behind Apple, Amazon, Alphabet and Microsoft.

A data privacy scandal involving the political consulting firm Cambridge Analytica and misinformation on WhatsApp contributing to mob killings in India have added to the pressure on Facebook to re-evaluate how its services maintain security and decorum.

Still, the challenge will be how to stem further losses.

Wehner said the "deceleration", as he termed it, is "a combination of factors", including the rising USA dollar; what Wehner called the company's newfound "focus on growing engaging new experiences like Stories and promoting of those; giving greater controls to users of the service people who use service for privacy".

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