Facebook market value plunges $119 billion

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Net income was similarly up, to $5.1 billion from $3.9 billion the year-ago quarter, but that didn't assuage investors and institutions.

"For such a big company to suffer such a significant decrease in price is really wonderful to watch", said Erik Davidson, chief investment officer at Wells Fargo Private Bank.

Facebook chief executive Mark Zuckerberg's fortune took a more than $15 billion hit yesterday as the social media company suffered the biggest one-day wipeout in USA stock market history.

Facebook founder and current centre of controversy, Mark Zuckerberg, seemed unfazed by the loss of users.

The company had warned investors to expect a surge in costs due to efforts needed to address concerns about the Cambridge Analytica scandal and Facebook's inadequate handling of users' privacy.

"The company has not managed its growth as well as most of us thought, " Wieser wrote.

At one point during the call, Facebook shares were trading down as much as 24 percent, an unprecedented drop for a large firm.

Facebook has struggled in recent years with several privacy issues.

Sales in the second quarter grew 42 per cent, its slowest pace in almost three years, to $13.2 billion compared with $9.3 billion a year ago.

On a conference call to discuss earnings, Zuckerberg said profits would most likely take a further hit because the company planned to spend more on security. The share price was on its way to the biggest single-day drop in the company's history. "We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect", said CEO Mark Zuckerberg in a statement.

New European privacy rules, inspired in part by Facebook's relentless mining of its own users' data, are starting to hamper the company's advertising business.

The shift in Facebook's business fortunes follows a series of crises that began in late 2016 with the revelations that it had become a prime distributor of misinformation. Its advertising engine depends on user data to accurately target people with what they might be interested in. Today, Facebook's chief legal officer announced he's departing at the end of this year for family reasons.

Now come the big questions: Is this a temporary setback, or the start of a painful new road for the giant social network?

"GDPR was an important moment for our industry", Zuckerberg said on Wednesday. "Looking beyond 2018, we anticipate that total expense growth will exceed revenue growth in 2019".

Facebook has other bright spots. Facebook's plunge was the biggest one-day drop in value for any publicly traded company.

"The implementation of GDPR in Europe and continued scrutiny of privacy policies following the Cambridge Analytica scandal left investors feeling uncertain about Facebook", says Aaron Goldman, CMO of 4C, a Facebook marketing partner.