Facebook's value falls $148 billion after Q2 earnings call

Joel Saget  AFP  Getty Images

Joel Saget AFP Getty Images

The results spelled out disaster for its market value, despite the company heading into Wednesday with a share price of $217.50. Facebook lost about $130 billion in market value in just two hours, its steepest stock decline ever, and the personal wealth of Facebook co-founder and chief executive Mark Zuckerberg also took a major hit, Mark Zuckerberg lost almost $17 billion in just two hours on Wednesday.

As an example of its new strategy, Wehner said Facebook will put more development muscle behind the company's Stories feature. "In the US and Canada, Facebook's daily active users remained flat, sequentially, at 185 million, while the number actually fell in Europe, falling to 279 million - down from 282 million".

Facebook's stock tanked after a disappointing second-quarter earnings report that saw the company miss revenue expectations and warn of slowing growth ahead.

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.

No company has ever dropped that much in history. Piper Jaffray hiked their outlook to $2,100 from $2,075 and Wedbush raised its price target to $2,100 from $1,800.

Still, investors weren't prepared for numerous bombshells dropped by Facebook Chief Financial Officer David Wehner.

Facebook in freefall as weak outlook stuns market
Facebook's daily active users for the quarter were 1.47 billion, shy of the 1.49 billion forecast by StreetAccount and FactSet . Still, the news caught analysts by surprise after 12 straight quarters in which Facebook exceeded analysts' expectations.

Zuckerberg even noted during a call with analysts that "we're investing so much in security that it will significantly impact our profitability".

The revenue guidance from the company was "unprecedented", said Gene Munster, an analyst at Loup Ventures, in a note to investors.

Mobile advertising continued to to show gains, representing 91% of total ad sales, up from 87% in the second quarter of 2017.

CEO Mark Zuckerberg accounted for the majority of this sell-off, parting with $3.5bn worth of shares according to Bloomberg. The company's shares also took a sharp hit in the days following the revelation that Cambridge Analytica had illegitimately gained access to the personal data of tens of millions of the company's users.

Wehner gave three different reasons why the company's revenue growth would decline: currency headwinds, greater investments in new kinds of content-sharing, like disappearing videos, and greater user control over privacy - a direct response to criticism the company has fielded. Yet both categories are facing headwinds.

Shares in Facebook tumbled 19 per cent on Thursday on the United States' Nasdaq exchange to close at US$176.26 ($259.80) after sales and growth forecasts reported a day earlier, after normal trading closed, disappointed investors. The lower the operating margin, the less profitable the business.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.