Published: Sat, July 28, 2018
Markets | By Erika Turner

Facebook Heading for Its Worst Trading Day Ever

Facebook Heading for Its Worst Trading Day Ever

Facebook Inc (:FB.O) Chief Executive Mark Zuckerberg's fortune took a more than $15 billion hit on Thursday, as the social media company suffered the biggest one-day wipeout in USA stock market history a day after executives forecast years of lower profit margins.

This week, that myth was shattered.

Pivotal Research Group analyst Brian Wieser, who has a sell rating on the stock, says there are limits to growth in digital advertising, even for Facebook. Some reasons included Facebook investing in Stories, which has lower levels of monetization, as well as improving privacy features as a result of GDPR and other user demands.

It's official. Facebook just had the biggest stock market wipeout in American history.

Facebook founder Mark Zuckerberg also took a $14.5 billion (£11 billion) hit to his own personal fortune in the process due to owning almost 17% of the company's shares.

As a result, their share prices soared.

But Facebook's recent woes appear to be more than just a temporary bump in the road. By Thursday afternoon, all its gains for the year had vanished.

Greenfield said he could "sense the fear/panic in investors' voices" after the Facebook analyst call, but that he had maintained his outlook. Three Wall Street firms, including Raymond James, have lowered their ratings on Facebook and reduced price targets since Wednesday's disappointing guidance.

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The drop came after the company announced Wednesday it had weaker revenue than expected. Twitter, which reports earnings Friday morning, saw its stock drop by more than 3 percent by 12:43 p.m.

On Thursday, the S&P 500 was down only slightly - 0.3 per cent - despite Facebook's tumble. While the 42% growth percentage sounds high, when compared against the first quarter of 2018, Facebook's revenues grew by only 11% over the first quarter. Many have been consolidated in the federal court in San Francisco.

The market is looking ahead. "There are always going to be these one-day disasters".

Despite signs of support from other investors the bid is unlikely to succeed due to Facebook's dual share structure, which gives Class B shares, of which Zuckerberg owns 75% of the total, 10 times the voting power of Class A ones. The company is grappling with new data laws in Europe, criticism over its content policies and privacy issues. Shares were down as much as 20 percent.

Still, the sheer size of Facebook's fall on Thursday became a focus for investors.

Before the results were announced, Facebook's shares had closed in NY at $217.50, a record high, and had gained 23% this year.

There are few examples of single-day losses so large. During the last 9 years, the channel has won over 197 awards and accolades at the prestigious Asian Television Awards, Ramnath Goenka Excellence in Journalism Awards, Indian Television Academy Awards, News Television Awards and Indian Telly Awards, making it India's Most Awarded English News Channel. Adjusted for inflation, that loss would be more than US$130 billion in 2018 dollars. Amazon, Alphabet and Microsoft are not far behind, with market values of more than US$800 billion apiece. 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 United States company.

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