Zuckerberg loses more than $15 billion in Facebook fall

Gladys Abbott
July 27, 2018

Zuckerberg has also been selling stock since Facebook reported its 2018 Q1 results. Wehner said the company will invest billions of dollars per year improving safety and security after a bruising period of headlines about Facebook's role in enabling fake news and election meddling. While it is true that Facebook's loss of $119 billion in a day is the biggest one-day drop in US stock market history, it should be noted that the large loss is partly due to Facebook's massive valuation as a company.

The single biggest loser is Mark Zuckerberg, Facebook's founder and chief executive, who owns almost 17% of the company.

Facebook boss Mark Zuckerberg's fortune has shrunk by nearly $16 billion after the social network was clobbered by the biggest one-day price drop in stock market history.

The loss of stock value bumped Zuckerberg from number four down to number six - six! - on Forbes' ranking of the World's Billionaires, behind Spanish fashion magnate Amancio Ortega and Warren Buffett. It would also wipe his US$13.7 billion of gains for the year, leaving him with just less than US$70 billion.

Daily user growth for Facebook's namesake service has slid in six straight quarters, bringing it to 1.47 billion users in the second quarter from 1.23 billion at the end of 2016 when it became embroiled in political issues.

Advertising revenue for the quarter was $13.04 billion, missing analyst forecasts of $13.16 billion.

Other companies have, in the past, experienced similar plummets on the stock exchange, if not quite as severe as Facebook, who are now battling new data laws and public concern over their privacy policies.

For more than a year - ever since Zuckerberg published a 5,000 word manifesto arguing that Facebook needs to make the world a better place by bolstering civic engagement and addressing social ills - the company has seemed torn between its philosophical mission and its economic one. Traders are bracing for a decline in tech stocks when the markets open Thursday.

David Wehner, Facebook's chief financial officer, said on Wednesday the company's decision to give its users "more choices around data privacy" following the Cambridge Analytica scandal "may have an impact on our revenue growth".

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"I think many investors are having a hard time reconciling that deceleration", Brent Thill, an analyst at Jefferies LLC, told Facebook executives, asking for a little more clarity on the reasoning. We're starting to see that this quarter.

For Facebook, financial stumbles are rare. It reached $25.91 per user, up from $23.59 during the first quarter. In addition, the company expects to invest in products like Stories "that now have lower levels of monetization", while the introduction of new controls for users to limit their data-sharing with Facebook "may have an impact on our revenue growth", the CFO said.

In the USA 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.

The company has also been bombarded by public criticism over its content policies, especially in Myanmar and Sri Lanka, where misinformation has led to violence.

Facebook has shown that it can not sail forever forward while facing various storms, including Cambridge Analytica and the Russian government's use of the social media platform to sow divisions amongst Americans during the 2016 presidential campaign.

Facebook said for the first time more than 2.5 billion users interact with at least one of its apps each month (which include Instagram, WhatsApp and Facebook).

Some analysts said Facebook's issues would not be easily resolved.

The startling decline comes after Facebook reported user growth and sales that fell short of investor expectations, leading many shareholders to frantically sell their stock on Wednesday night before market close.

Investors' alarm was likely triggered by a failure in growth in its most important markets, the combined USA and Canada segment and Europe.

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