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Mark Zuckerberg just lost almost $16 billion in one day

28 July 2018

By the time Wall Street closed yesterday, Facebook had lost over $120 billion of the company's value and shareholders are not happy.

But it stayed relatively steady after that, at least until the call started and David Wehner, Facebook's chief financial officer, began discussing the company's financial outlook. "As of Wednesday, Facebook Inc., lost over $100 billion in stock market value".

Company shares fell 19 percent Thursday.

Zuckerberg placed himself in the midst of yet another controversy after he received considerable backlash for justifying the lack of diligence Facebook demonstrated while handling offensive social media content posted by Holocaust deniers. Overall, Facebook grew its global users by 11 percent from the same time past year.

"Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4".

Needless to say, the next year will be very interesting for Facebook's financial fortunes.

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He cited currency fluctuations and a shift in usage to features where Facebook shows less advertising or charges less due to lower demand.

A total of $128 billion was wiped off Facebook's value in just two hours following the second quarter briefing, the first since the Cambridge Analytica scandal and new European Union data rules came into effect. Like Facebook, Instagram depends on ads to generate revenue, and Stories is supposed to help sell more ads.

"With stagnating core user growth, we think there is too much near- to mid-term uncertainty to recommend shares at this point", Japanese investment bank Nomura said.

Three key factors are driving Facebook's expected revenue growth decline, Wehner said.

The social media giant revealed in its second quarter results that its monthly active user numbers across all of its platforms had grown to 2.23bn at an increase of just 11 per cent, falling short of consensus estimates of 2.25bn as polled by Thomson Reuters. Commercialisation of those apps is nascent.

The Seattle-based company cut hundreds of consumer jobs in its headquarters earlier this year, in a move that may have lowered costs and freed up resources for fast-growing areas like Amazon's voice aide Alexa.

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CEO Mark Zuckerberg accounted for the majority of this sell-off, parting with $3.5bn worth of shares according to Bloomberg. Traders are bracing for a decline in tech stocks when the markets open Thursday.

Analysts sounded notes of concern about the earnings report.

The quarter was also marked by Europe's implementation of strict new data laws, which Facebook said led to fewer daily visitors in that region.

Misinformation on WhatsApp contributing to mob killings in India have added to the pressure on Facebook to re-evaluate how its services maintain security and decorum.

Facebook increased spending in the wake of the 2016 U.S. presidential election, which brought evidence of Russian meddling via social media.

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Mark Zuckerberg just lost almost $16 billion in one day