Published: Wed, August 01, 2018
Markets | By Erika Turner

Facebook sued after stock plunge

Facebook sued after stock plunge

Siva Vaidhyanathan, a media studies professor at the University of Virginia and author of the new book, "Antisocial Media: How Facebook Disconnects Us and Undermines Democracy", dismissed the significance of the stock plunge.

According to Bloomberg, Zuckerberg's fortune tumbled in late trading Wednesday, as shares of the social media giant slid 20% in post-market trading in NY on disappointing results.

The complaint was courtesy of James Kacouris, who filed the lawsuit in Manhattan federal court.

More worrisome was the number of daily active users, which grew by just 22 million - the lowest such number since at least 2011.

Kacouris stated that the marketplace, in one way or another, was "shocked" the moment "the truth" began to surface on Wednesday from the very headquarters of Facebook.

The more than $15 billion in net worth that Zuckerberg lost on Thursday is roughly equal to the wealth of the world's 81st-richest person, now Japanese businessman Takemitsu Takizaki, according to Forbes real-time data.

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He said the 19 per cent plunge in Facebook shares the next day stemmed from federal securities law violations by the defendants.

The lawsuit seeks class-action status and unspecified damages. A Facebook spokesman declined to comment. Most of its large institutional investors aren't panicking.

The earnings covered the company's first full quarter since the Cambridge Analytica privacy scandal erupted. Since then, many have been consolidated in the federal court in San Francisco. However, the titular chairman of the Berkshire Hathaway Inc.'s $83 million fortune without a doubt tops the Facebook owner's $66 billion.

Buffett now ranks third among the world's billionaires, while Zuckerberg is sixth. According to a report by Bloomberg, the 24 percent drop in Facebook's share valuation in after-hours trading is likely to be replicated in the normal trading session, which will cause Facebook's market capitalization to take a massive hit.

On the eve of Zuckerberg's scheduled testimony previous year, Facebook withdrew the proposal, which would have let him keep control of the social media company even while selling shares to fund his philanthropy.

Economists and investors cautioned against putting too much weight on the growth, which matched expectations, as the trade-related boost is expected to unwind later this year.

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