Facebook takes a AU$161 billion dive, worst stock drop in market history

Facebook share prices fell 19% overnight, with CEO Mark Zuckerberg’s personal value taking a AU$20.3 billion hit.

A year of scandals and privacy scares has caught up with the social media giant, marking the worst trade day for Facebook since going public in 2012. Following its quarterly report yesterday with executives predicting the company facing lower profit margins in the next two years, Facebook’s value fell by US$150 (AU$203) billion within the first two hours.

In addition, executives told analysts that Facebook had failed to reach revenue estimates for the first time since 2015. Facebook said its new approach to privacy and security would in part contribute to the slowed growth – driven by the Cambridge Analytica scandal and the introduction of GDPR.

“Our total revenue growth rates will continue to decelerate in the second half of 2018,” said Facebook’s chief financial officer David Wehner in a call with analysts.

Zuckerberg told analysts, “We’re investing so much in security that it will significantly impact our profitability.”

Zuckerberg’s personal wealth – holding a 13% stake in the company – fell by US$15 (AU$20.3) billion to a mere US$74 (AU$100.4) billion.

ABC News reports that the company also warned that the toll would not be offset by revenue growth from emerging markets and Instagram, which has been relatively unaffected by privacy and transparency concerns.

Facebook representatives mentioned operational and other financial highlights such as a 47% rise in year-over-year (YoY) headcount, as well as an 11% increase in daily active users YoY.

Facebook’s European monthly active users fell by approximately one million people amid the introduction of GDPR and surrounding regulations – forcing changes to the platform’s privacy terms and sign up process.

 

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