Facebook market value plunges $120 bil

30 July, 2018, 21:29 | Author: Shannon Aguilar
  • Facebook could lose $151 billion in market capitalization today

It's official. Facebook Inc. just had the biggest stock-market wipeout in American history. The stock, it turns out, can fall every bit as fast as it rises. Facebook shares dragged down some of the other social networks as well, including Twitter and Snap. And does it portend similar trouble for other high-flying tech giants? As a result, the company's market value dropped $148 billion.

Facebook founder, chairman and CEO Mark Zuckerberg, who has started feeling the pressure with lawsuits being filed against him, is also being asked to quit the top post by shareholders. Unfortunately, Facebook's spokeswoman declined to release a further comment about the ongoing complaint. In fact, on Wednesday the shares hit a new record high before retreating.

Daily Wire believes the cause of the losses lie at the feet of the data leak scandals Facebook has gone through recently, in particular Cambridge Analytica. This was after a 19 percent one-day plunge in the company's share price.

Both the slower growth forecast and heavier spending reflect problems largely of Facebook's own making. This was due to issues involving fake news, trolls, and even Russian manipulators.

Zuckerberg reiterated in the earnings call last week that the company's major investments in security will lower its profitability.

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Some see the Facebook selloff as clear evidence that nothing can grow forever, especially not the world's biggest companies, especially not at the rate of nimble, promising startups.

There are several reasons for the declining revenue growth rate.

However, 2.5 billion people use at least one of the company's applications, whether that be Facebook, Instagram, Messenger, or WhatsApp. Scott Kessler, a representative from CFRA Research commented on the issue: "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".

Things could get rougher still.

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