Mark Zuckerberg might be in trouble, as Facebook stock took one of the biggest hits on Thursday, losing almost $16 billion.
“Shares fell as much as 19.6 percent to $174.78, a decline that if sustained would wipe about $124 billion off the company’s value — or nearly four times the entire market capitalization of Twitter Inc,” according to the Huffington Post.
On Wednesday, Facebook CFO David Wehner had a sales call with analysts and told them that sales growth may decline as the company prioritizes new formats like Stories and offers users “more choice around privacy.” This call could be the reason so many people decided to back out of their stock on Thursday.
But, according to CNN, Wehner expects facebook expenses to grow as “the company will invest ‘billions of dollars per year’ improving safety and security after a bruising period of headlines about Facebook’s role in enabling fake news and election meddling.”
Facebook’s margin fell to 44 percent in the second quarter from 47 percent a year ago as it spent heavily on security and initiatives to convince users the company was protecting their privacy.
Facebook’s stocks have slowly been losing money since their various data and privacy controversies. According to The Verge, this is the company’s slowest quarterly growth since 2011 and “the company has pretty much stopped growing entirely in the U.S. and Canada, which are its most lucrative markets.” Though the fans are still out there and continue to use it, or well, some of them.
“Of 47 analysts covering Facebook, 43 still rate the stock as ‘buy,’ two rate it ‘hold’ and only two rate it ‘sell.’ Their median target price is $219.30. MoffettNathanson analysts called the company’s forecast ‘either the new economic reality of their business model or a very public act of self-immolation to stave off further regulatory pressure,'” according to the Huffington Post.
According to CNN, Facebook’s growth has dropped nearly half as the social network added 22 million daily active users globally during the quarter. The same quarter last year it added 41 million daily users.
Facebook found success in things other than typical social media posting, like adding Stories and video app, Snapchat. But will these two additions be enough?
“The question is will this monetize at the same rate as News Feed,” Sheryl Sandberg, Facebook’s COO, said on the conference call. “And we honestly don’t know.”