Facebook sees biggest fall in corporate history as shares lose $120bn

Virginia Carson
July 28, 2018

That is believed to be the largest one-day drop of any company on the American stock market.

Well even with all of its control, power, and data it has on everyone the social networking giant saw its shares dip 19% in a single day which saw $120 billion eradicated from its market value, with Facebook now holding the record for the largest one-day drop in the history of the United States stock market. If that loss holds through Thursday's close, he will slip to sixth place from third in the Bloomberg Billionaires Index.

Investors took issue with sales and subscriber numbers that fell short of expectations. 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. This is the first time in 3 years that Facebook did not match or exceed the market expectations in a quarter.

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

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In pre-market trading on Thursday, Amazon stock had dipped 1.5 percent, Netflix 1.8 percent, and Alphabet 1 percent.

"Our total revenue growth rate decelerated approximately 7 percentage points in Q2 compared to Q1", he said.

The plunge in Facebook's share price puts the social network on track to rack up the biggest ever one-day drop in a company's market value.

On the call, Jefferies & Co. analyst Brent Thill said that "many investors are having a hard time reconciling that deceleration". "It just seems like the magnitude is beyond anything we've seen, especially across a number of the tech (companies) we cover".

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RBC Capital Markets analyst Mark Mahaney said the drop creates a rare buying opportunity for Facebook shares. And executives warned that the company would invest heavily in privacy and security, and that revenue growth would most likely slow in coming quarters.

Needless to say, the next year will be very interesting for Facebook's financial fortunes. "Facebook has also been sucked into the probe into alleged Russian meddling in the 2016 presidential election".

As it stands, Facebook still boasts 2.23 billion users, which make up nearly a third of the entire population of Earth. "Our view is that the company is far from out of the woods", Brian Wieser of Pivotal Research said. At present, Facebook has 1.47 billion daily active users and 2.23 billion monthly active users.

The complaint filed by shareholder James Kacouris in Manhattan federal court accused Facebook, Mr Zuckerberg and chief financial officer David Wehner of making misleading statements about or failing to disclose slowing revenue growth, falling operating margins, and declines in active users.

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