Facebook loses a whopping $150 billion in just two hours; share price tumbles 24%
Facebook had cautioned investors to expect a big jump in costs because of efforts to address concerns about poor handling of users' privacy and to better monitor what users post. Total expenses in the second quarter surged to $7.4 billion, up 50 per cent compared with a year ago.
)
03:36 PM IST
Facebook share price plunged 24 per cent on Wednesday after the social media network's revenue and user growth fell short of investor expectations. Concerns about the impact of privacy issues on the social media company's business, with executives warning that revenue growth would slow and expenses would rise, led the steep fall in the stock.
The sharp plunge in the stock price wiped out about $150 billion in market capitalisation in under two hours.
The company had cautioned investors to expect a big jump in costs because of efforts to address concerns about poor handling of users' privacy and to better monitor what users post. Total expenses in the second quarter surged to $7.4 billion, up 50 per cent compared with a year ago.
"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," said Chief Financial Officer David Wehner.
Expenses are expected to grow 50 percent to 60 percent compared with last year as the company invests in security, marketing and content acquisition, he said.
The firm, which is facing backlash for its handling of fake news and privacy, said it had 2.23 billion monthly active users at the end of June. This was up 11 per cent on June 2017, the slowest growth in more than two years.
Facebook also plans to spend billions to improve the way it monitors content, tracks advertisers and treats user data - areas where it has faced regulator scrutiny.
WATCH ZEE BUSINESS VIDEO HERE
The firm, which owns Instagram and WhatsApp, is also investing in new features, such as virtual reality and video.
Daniel Ives, chief strategy officer at GBH Insights, said the firm`s forecast was "nightmareish".
"They gave a very disappointing outlook for the second half of the year and 2019 and that`s going to significantly weigh on the stock in the near term," he said.
(With inputs from agencies)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
)
8th CPC Salary Calculations: What can be revised basic pay for Grade Pay 1800, 2400, 2800 and 4200 employees at 1.92, 2.08 and 2.28 fitment factors?
)
Power of Rs 4,00,000 Lump Sum: In how many years can you generate Rs 1 crore corpus with one-time investment of Rs 4 lakh?
)
Power of Rs 10,00,000 One-time Investment: How your Rs 10 lakh investment can turn into Rs 3 crore, Rs 4.47 crore, and Rs 6.63 crore in 30 years
)
Power of Rs 1,50,000 PPF Investment: How many years will it take to generate Rs 16 lakh/year tax-free income from Public Provident Fund?
)
Top 5 Largecap Mutual Funds With up to 42% Return in 3 Months: Rs 22,222 SIP investment in top-performing fund has jumped to Rs 70,440
)
Shares to buy for long term: Analysts recommend buying 4 midcaps and 3 largecap stocks; check targets
)
Power of Rs 13,000 SIP: How many years will it take to generate Rs 9,00,00,000 corpus with just Rs 13,000 monthly investment?
)
Top 6 Multicap Mutual Funds With up to 34% Return in 6 Months: Rs 26,666 SIP investment in No. 1 scheme is worth Rs 1,74,118 now
)
8th Pay Commission Pension Calculations: How your Rs 20,200, Rs 25,250, Rs 34,000, and Rs 44,200 basic pension can be revised at 2.10-2.50 fitment factors (detailed charts)
03:36 PM IST