Facebook’s value crashes by $111bn

Friday, 27 Jul, 2018

The social network star - which has weathered storms over privacy and data protection - is now looking at cooler growth following a years-long breakneck pace.

According to Bloomberg, if the overnight fall in out-of-hours trading is maintained when the USA market officially opens on Thursday, some $151bn could be wiped off its stock market value - more than any company in history.

One day earlier, Facebook had released a disappointing second-quarter financial report.

Zuckerberg controls about 60% of Facebook's voting shares, so the proposed change would represent only a limited check on his power, notes Trillium in a new shareholder proposal submitted on June 29 that would be voted on during the 2019 annual meeting. "In the mid-term advertisers still believe in Facebook, as do its users".

"We've taken strong steps to address a number of issues, including election integrity, fake news and protecting people's information", she said.

Bottom line: For most companies, generating $13.23 billion in quarterly revenue-a 42 percent YoY increase-would be cause for celebration, but Facebook isn't like most companies.

In contrast to Facebook, Amazon on Thursday in the United States reported a record profit and forecast plowing past analyst estimates. Worldwide daily user growth for Facebook's namesake service slid for its sixth straight quarter, bringing it to almost 1.5 billion users in the second quarter. That surprised investors because of the belief that the new laws wouldn't hurt revenue.

Yesterday, BuzzFeed published a memo by chief security officer Alex Stamos written to staff in March after the initial Cambridge Analytica stories broke in which he urged the company to pick sides on important issues.

"Weaknesses in AI are forcing (Facebook) to keep hiring humans to do the jobs that the machines are incapable of", he said. Facebook's daily active users in Europe fell by three million in the quarter amid the new regulation.

Facebook reported $5.1 billion in profit, or $1.74 per share, compared with the average estimates of $5.1 billion and $1.72 per share among research gathered by Thomson Reuters. The company's leaders, including its chief executive, Mark Zuckerberg, added that the trajectory was not likely to improve anytime soon, especially as Facebook spends to improve the privacy and security of users.

It's official. Facebook just had the biggest stock market wipeout in American history. Revenue growth may slow in the back half of 2018, but do not extrapolate too much from there.

"We suspect Facebook is sticking with its historical playbook and will, in fact, beat these lower numbers". Mobile is eating the world and Facebook is a core holding to benefit from that shift. Founder and CEO Mark Zuckerberg went on an apology tour and testified before Congress and British Parliament regarding the company's practices.