Facebook has had the worst day in stock market history as shares plunged 19 percent, wiping $119 billion off the company’s value.
Thursday was the social media giant’s worst day in six years as a public company, as well as the biggest one-day wipeout in US stock market history.
CEO Mark Zuckerberg saw $12 billion wiped off his fortune in less than 24 hours.
The Facebook founder’s net worth is now valued at $74 billion, dropping him to the fifth richest person in the world.
Facebook’s shares plunged $41.24 to $176.26 after it failed to meet Wall Street’s estimates for user growth and quarterly revenue.
Facebook has had the worst day in stock market history as shares plunged 19 percent, wiping $119 billion off the company’s value
Eight Facebook insiders have sold a combined total of $3.9 billion worth of stock since the social media site was plagued by the Cambridge Analytica scandal.
The sales were part of pre-determined trading plans, according to Bloomberg.
Zuckerberg accounted for about 90 percent of total sales, which were part of a pre-determined plan he announced last September.
The Facebook CEO and his wife Priscilla Chan pledged they would sell most of their shares over time so that they could invest in charities.
Brian Wieser, an analyst at Pivotal Research, has been recommending to sell Facebook stocks since last year. He predicts the social media giant’s shares still have another 20 percent to fall.
Wieser’s street-low price target – his prediction of where stocks will move within the next year – is at $140, compared to the $174.78 low Facebook hit during early Thursday trading.
The share price eventually closed in $176.26, but Wieser believes Facebook’s days of 30 percent growth are now outnumbered.
‘What a lot of the investment community has missed, is that they looked at growth as rather infinite,’ Wieser told Bloomberg TV. ‘This is only part of a bigger story that hasn’t fully played out yet.’
Investors hammered shares in the social media giant after it reported slower revenue growth in the second quarter after markets closed on Wednesday. The results fell short of Wall Street expectations as the company continues to grapple with privacy issues.
Subsequently, in overnight trading, the company’s shares plunged 20 per cent, a figure that was then reflected when markets opened Thursday morning.
Facebook’s second-quarter results were the first sign that new European privacy laws and a string of privacy scandals involving Cambridge Analytica and other app developers are hitting the company’s business.
In midday trading Thursday, the company’s market value (the number of outstanding shares multiplied by the value of a single stock), fell by more than $122 billion.
That means that in one day, just the decline in Facebook’s market value is roughly the entire market value of McDonald’s or Nike, give or take a few billion. And it far exceeds to total market value of major U.S. multinational corporations such as General Electric, Eli Lilly or Caterpillar.
But the company still has a total market value close to $511 billion, which exceeds the annual gross domestic product of countries like Poland, Belgium and Iran.
The $15.8 billion in net worth that Zuckerberg stands to lose in the move is equal to the wealth of the world’s 81st-richest person, currently Japanese businessman Takemitsu Takizaki, according to Forbes real time data.
The tumbling stock prices comes as:
- The social media giant released its financial results on Wednesday reporting slower revenue growth in the second quarter
- Shareholders filed a proposal to fire Zuckerberg as chairman of Facebook, citing ‘mishandling’ of scandals including user privacy and election meddling
- Facebook executives defended hosting Fox News and ‘atrocious’ Infowars on its platform in a heated exchange with reporters
- The parents of a Sandy Hook massacre victim begged Zuckerberg to remove hateful and harassing comments posted by conspiracy theorists
Describing the announcements as ‘bombshells’, Baird analysts said the issues were to a large degree ‘self-inflicted’.
Facebook executives made investors nervous on Wednesday in a call with analysts when they said profit margins would plummet for several years due to the costs of improving privacy safeguards and slowing usage in its biggest advertising markets.
Chief financial officer David Wehner warned in the earnings call that revenue growth had already ‘decelerated’ in the second quarter and would drop ‘by high single digit percentages’ in coming quarters
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