Facebook's stock dives 20% on dire predictions following second-quarter financials

Anna Jefferson
July 28, 2018

Once a darling of Wall Street, Facebook has always been one of the market's best-performing tech stocks but with its announcement this week that the company's growth may be slowing after an, it's becoming apparent Facebook's prosperity isn't guaranteed, reports CBS News' Bianna Golodryga.

Facebook missed projections on revenue and global daily active users this quarter after struggling with data leaks and fake news scandals. Three Wall Street firms, including Raymond James, have lowered their ratings on Facebook and reduced price targets since Wednesday's disappointing guidance.

His fortune tumbled by US$16.8 billion in late trading Wednesday, as shares of the social media giant slid 20 per cent at 5:37 p.m.in NY on disappointing results.

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He said: "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". Facebook's loss was the biggest single-day drop since it started trading publicly in May 2012.

Facebook's daily active users for the second quarter of 2018 were effectively flat in the US sequentially, and even declined in Europe compared with Q1 - marking the first time the company has seen such a decline in recent quarters. By the close of trading, Bloomberg declared that Facebook had suffered the largest stock market loss in value during a single day ever for any U.S. company. "It just seems like the magnitude is beyond anything we've seen".

Describing the announcements as "bombshells", Baird analysts said the issues were to a large degree "self-inflicted" as Facebook sacrifices its core app monetisation to drive usage.

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Facebook's stock took a beating Wednesday - before being utterly pummeled. Mobile now makes up 91% of the company's advertising revenue.

Facebook chairman and CEO Mark Zuckerberg is having a very bad day.

The plunge in Facebook's share price puts the social network on track to rack up the biggest ever one-day drop in a company's market value.

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Facebook is the largest social media company in the world, with Twitter the second-largest behind what Mark Zuckerberg created. I saw them sprawled out across airports recently when I traveled, and it was definitely weird to see them.in-person, letting me know they're protecting my data more, on my phone. all while I know they don't. The decline in Facebook's market value was roughly equivalent to the entire value of some of the country's best-known companies, including McDonald's, Nike and industrial conglomerate 3M. And he reiterated a point made during earlier calls: that Facebook's profitability will suffer because of its heavy investments in security.

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