Mark Zuckerberg loses $16.8 billion in a snap as Facebook plunges

26 July, 2018, 13:22 | Author: Shannon Aguilar
  • Facebook loses $150bn in 2hrs after warning of company’s growth slowdown

A Facebook panel is seen during the Cannes Lions International Festival of Creativity, in Cannes, France, June 20, 2018. Chief financial officer David Wehner told analysts in a follow-up call to brace for a possibly deeper slowdown as the company seeks to expand new offerings such as Stories and increase privacy and security for users.

The sell-off wiped out almost $150 billion from Facebook's market cap and, faster than you can say, "Move fast and break things", erased roughly $20 billion from the tech mogul's wealth. Global DAU rates increased by 11% compared to the year-ago quarter, but they were still below what Wall Street was calling for.

After-hours trade saw Facebook shares plunge by some 21 per cent, wiping out an estimated US$130 billion in market value if the slump is confirmed at Thursday's market opening. Facebook is rolling out a version of those protections to the rest of the world.If users choose to share less data with Facebook, that could hamper the company's ad-targeting abilities, making it less attractive to marketers.

A data-analytics dustup that dominated much of the year and lingering questions about how it handles misinformation dinged the social-networking juggernaut on Wednesday, sending its shares into a tailspin in late trading. "This is a clear inflection point for Zuckerberg & Co.as the company's advertising fortress and MAU metrics still look "well intact" despite the massive potential headwinds caused by Cambridge and the overall privacy worries (GDPR) in Europe although challenges remain".

Facebook reported a 42 percent increase in revenue and a 31 percent jump in profits for its second quarter, compared with a year earlier. "GDPR has not had a significant (ad) revenue impact, but we also recognize it wasn't fully rolled out this quarter", Facebook Chief Operating Officer Sheryl Sandberg said reacting to the statement, CNBC reported.

He cited currency fluctuations and a shift in usage to features where Facebook shows less advertising or charges less due to lower demand. Facebook has largely saturated in the United States and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.

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Only months after a data privacy scandal, Facebook is seeing fewer frequent users than it expected, according to CBS News.

The number of monthly users - a key indicator of Facebook's popularity - rose slightly, to 2.23 billion from 2.2 billion last quarter.

Revenue from emerging markets has not picked up the slack either. Management also warned revenue growth rates would decelerate in Q3 and Q4.

"The company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter", Munster wrote. Facebook reported its slowest growth rate ever, with 2.23 billion people logging in at least once a month in June, below the 2.25 billion analysts expected.

The threat of additional regulatory setbacks remains a concern, according to analysts.

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