Facebook stock plummets; company's worst trading day since going public in 2012

Facebook faced a day of reckoning as its shares plunged today in the company's worst trading day since going public in 2012.

Facebook's grim forecast predicts that margins will be much lower for the next few years due to "more choices around data privacy" as well as currency market predictions and the GDPR, according to a statement made by Facebook CFO David Wehener during the earnings call.

The company warned its investors that a huge financial injection would be required to buttress the business to address the controversies it's now facing, with revenue growth expected "to decline by high single-digit percentages from prior quarters". "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", writes Fox News.

Pivotal Research Group analyst Brian Wieser, who has a sell rating on the stock, says there are limits to growth in digital advertising, even for Facebook.

The Facbook CEO also allowed the Russian meddling scandal to develop in 2016 in which Russian operatives bought Facebook ads to influence USA voters.

For founder Mark Zuckerberg, the loss came to nearly $16 billion, according to Forbes, which tracks billionaire wealth in real time.

Zuckerberg's own net worth took a significant hit as the stock fell, losing about $15.4 billion dollars according to Forbes.

In a sign of just how bullish investor expectations had been running, though, the collapse merely returned Facebook shares to a level last seen in early May.

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Like this story? Share it with a friend! The loss of users - the whole reason for the network effect, the reason Facebook can charge advertisers so much money - is what Facebook needs to overcome.

Wall Street didn't take too kindly to that: Facebook's stock price dropped almost 20 percent in after-hours trading. All users had to affirm consent to its data collection practices before being allowed to continue to use Facebook.

Ben Bajarin, an analyst at Creative Strategies, calls this "new territory" for Facebook.

Facebook missed projections on revenue and global daily active users this quarter after struggling with data leaks and fake news scandals.

"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.

Twitter, which reports earnings Friday morning, saw its stock drop by more than 3 percent by 12:43 p.m. If the sell-off hits those levels in Thursday trading, it will mark one the largest collapses in value ever suffered by a US -traded company in a day.

During the second quarter, Facebook's user base also stagnated or shrank in some markets.

  • Darren Santiago