After a surprisingly weak growth forecast in this week’s earnings report, Facebook’s stock price fell 19% today. The drop, which wiped out an estimated $ 120 billion in market value, is the biggest one-day drop in U.S. stock market history.
Facebook shares fell as much as 23 percent after-market on Wednesday, when Facebook announced its second-quarter results. While revenue grew 42% in the quarter, it consistently missed analysts’ projections.
More worrying was the number of daily active users, which grew by just 22 million – the lowest number since at least 2011. Facebook’s CFO warned that revenue growth “would decline from high percentages to one. figure “for the remainder of the year. .
Facebook’s decline far exceeded the $ 91 billion Intel lost in September 2000, during the initial dot-com collapse. Microsoft lost $ 77 billion in one day in dot-com collapse, says Bloomberg.
Facebook has faced a series of crises over the past two years, starting with Russian interference on the platform in the 2016 election and continuing with this year’s Cambridge Analytica data privacy scandal. The introduction of the General Data Protection Regulation in Europe cost the company 1 million users after its deployment, Facebook said.
In response to concerns about privacy, fake news and hate speech, Facebook has pledged to hire 20,000 new employees to work on security and moderation issues. This reduced Facebook’s revenue growth at the same time as it saturated its main North American market. Facebook has remained at 185 million users in the United States and Canada over the past two quarters, forcing it to look for growth elsewhere.