After months of scrutiny over Facebook’s role in 'fake news and 2016 elections coupled with concerns over data privacy, the social media giant’s stock plunged on Thursday after the released a weak financial report.
Facebook’s stock was off by almost 20%, closing at $176 at the end of trading on Thursday, down from $217 at the close of trading on Wednesday. The sell-off amounts to a loss of about $119 billion in equity for the company’s shareholders.
It was the biggest on day loss in Facebook's history and the largest market cap loss ever.
The sell-off was driven by earnings reports which revealed slowing user growth and declining revenue for the last quarter. As well, Facebook’s guidance to shareholders for the next quarter was decidedly gloomy.
“Our total revenue growth rate decelerated approximately seven percentage points in Q2 compared to Q1,” warned the company’s chief financial officer David Wehner in Facebook’s Q2 earnings release.
“Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4,” Wehner continued.
OIther metrics indicated headwinds for Facebook, including declining users in Europe, where the social media site reported about 3 million fewer monthly active users for the quarter.
Still, Facebook’s earnings weren’t all bad news. the company reported $5.12bn in net income for the quarter, up from $3.89 billion in the same quarter in 2017.
And the company record sales of $13.04 billion, which while up by %41.9 percent from 2017, were lower than analyst estimates and growth rates in previous quarters.