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Facebook sees biggest stock market value drop in history as growth slows

28 July, 2018, 10:12 | Author: Sara Gill
  • EnlargeROBYN BECK  AFP  Getty Images

A Facebook spokeswoman declined to comment.

"Our community and business continue to grow quickly", Facebook CEO Mark Zuckerberg said in a statement.

For numerous world's richest people, losing $16.8 billion in a day would be a wipeout. He was listed Thursday as $81.9 billion poorer than Jeff Bezos, who still hold the top spot on that list.

But amid every controversy, Facebook - the public company and business - seemed unscathed.

The price target upgrades come after the e-commerce giant reported blowout second-quarter earnings.

In the wake of the Cambridge Analytica data-privacy scandal, "Legal/regulatory developments have led to changes meant to support FB's platform and users, but they will notably restrain growth and profits for at least the next couple of quarters, in our opinion", Scott Kessler of CFRA Research wrote in a note.

In the Facebook stock sell-off, Zuckerberg lost almost $16 billion in personal wealth and some shareholders believe it's time the 34-year-old lost even more: his job.

The slower growth comes as the company grappled with privacy scandals. Wehner said the company will invest billions of dollars per year improving safety and security after a bruising period of headlines about Facebook's role in enabling fake news and election meddling.

As it stands, Facebook still boasts 2.23 billion users, which make up nearly a third of the entire population of Earth.


"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.

In North America, the daily user number was flat at 185 million, and in Europe it actually declined by three million people a day.

The social network fessed up to the exodus during its second-quarter earnings on Wednesday, admitting that the implementation of GDPR saw it lost a good swathe of European users.

In recent years, investors - from individual traders to the world's largest hedge funds - have snapped up shares in these companies, which include Facebook, Amazon, Apple and Google's parent company, Alphabet.

"With or without privacy issues, investors are scared that Facebook's interactions, particularly with those under 25, are falling", Sheehan said.

In fact, the call with Zuckerberg and his colleagues only made things worse for Facebook's share price.

The proposal, which reflects the strong feeling among Facebook investors that governance changes are essential, was written by Trillium Asset Management, which manages around $11 million (£8.4 million) in Facebook stock.

Pivotal Research Group analyst Brian Wieser, who has a sell rating on the stock, says there are limits to growth in digital advertising, even for Facebook.

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