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Facebook's value slumps $120bn in biggest-ever market hit

By Wale Azeez, business reporter
Facebook has recorded the biggest fall in corporate history as its value plunged by $120bn (?91bn) when markets opened in New York.
The share price dived nearly 20% after the social media giant warned it expects weaker growth.
The warning came during a conference call for its second-quarter results after market closed on Wednesday, sparking a share sell-off in after-hours trading.The technology giant had warned investors to expect a surge in costs due to efforts needed to address concerns about the Cambridge Analytica data scandal and Facebook's inadequate handling of users' privacy.Facebook also said it expects slower user growth, partly due to the effect of the data privacy scandals.The firm said it had 2.23 billion monthly active users at the end of June, up 11% on June 2017, marking the slowest growth in more than two years.Total revenue for the quarter rose 42% to $13.23bn (€10bn), but was below analysts' estimates of $13.36bn.
Facebook's value slumps $120bn in biggest-ever market hit

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Facebook founder Mark Zuckerberg's personal wealth has gone down after the share price fall
At the conference call, chief financial officer David Wehner said operating profit margin will sink to the "mid-30s" for more than 2 years.He added that quarterly revenue growth would be closer to 30% for the rest of the year.This was due to currency fluctuations and users choosing to have less personalised adverts as they opt out because of the European Union's General Data Protection Regulation (GDPR) that came into effect in May.
The results were for Facebook's first full-quarter since the Cambridge Analytica scandal.Shares in other technology companies were dragged down by the social media giant, as the technology sector fell 1.9%.

[img]https://e3.365dm.com/18/02/512x512/skynews-facebook-webpage_4230528.jpg" alt="The phone conversation that cost Facebook billions" class="sdc-article-strapline__image">
The phone conversation that cost Facebook billions
In a conference call with investors, a company spokesman revealed its long run of growth was coming to an end.

Michael Antonelli, managing director of institutional sales trading at Robert W Baird in Milwaukee, said: "It's going to be hard for markets today with such a massive market cap stock down so much."It is possible that easing tensions could outweigh something like Facebook, because that has been the biggest
concern of markets for weeks and Facebook is a one-off negative event."Chris Beauchamp, chief market analyst at IG Group, said: "Perhaps the data scandal is at last beginning to bite in Facebook's earnings."Certainly, the frequent references to the other platforms available such as Instagram and the new revenue metric of how many people use at least one of the Facebook apps each month send a message that this is a company looking to find ways of becoming more than just a social media platform.
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"High expectations can be a remarkable burden, and the reaction is often brutal when they are missed, but the revenue miss was slight, and $13.2bn is not to be sniffed at."Facebook might have its wings clipped, but it is still a remarkable money-making machine."
news.sky.com
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