Mark Zuckerberg just lost almost $16 billion in one day
Jul 28 2018 by Cristina Jennings
The privacy issue is a concern for the whole tech sector, as it could make it harder for these companies to sell user data or use it to make their products more effective. The rout knocked US$91 billion off its market value in a day.
Facebook Inc.'s scandals are finally hitting the company where it hurts: growth.
The stock, which plunged as much as 24% in after-hours trading Wednesday, had a cascading effect on competitors Snap and Twitter, which dropped, too.
Facebook's shares recovered somewhat after the call.
In lieu of Facebook's current multi-front crisis, one activist investor filed a proposal demanding that Zuckerberg be replaced as the firm's chairman for "mishandling" the numerous crises beleaguering the company, according to a report by Fortune. By the time Wall Street closed yesterday, Facebook had lost over $120 billion of the company's value and shareholders are not happy.
David Wehner, Facebook's chief financial officer, made a series of bombshell announcements yesterday when he warned markets the revenue slowdown will continue for some time.
"Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis", he explained.
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.
Despite Thursday's market dive, Facebook is still valued at over $500 billion (€430 billion) - roughly the level it was at in early May.
In North America, the daily user number was flat at 185 million, and in Europe it actually declined by three million people a day.
First, Facebook is battling currency headwinds. Its overseas revenue got a boost in dollar terms as the dollar appreciated against other currencies past year.
Facebook didn't respond to a request for comment.
More likely, though, market buzzards are holding off because of how quickly some analysts are turning on the company.
Wedbush Securities analyst Michael Pachter called the expansion in the company's gross profit margin "remarkable", citing impressive results from cloud sales and services to third-party merchants on Amazon.
Facebook's growth is slowing with users in some of its most lucrative markets.
Wehner warned analysts not to expect the company's financial results to get better anytime soon.
"We think that's the right thing to do for the business", he said.
For Facebook, a Wall Street darling even while members of Congress grilled its executives on Capitol Hill, the suits mark a turning point.