Facebook stock drops more than 20% after warning that revenue growth will take a hit
Social media giant Facebook shares have collapsed. The company’s shares fell by nearly 21 per cent on Wednesday due to fresh concerns over corporate misuse by Cambridge Analytics. Faced with the latest concerns, Facebook is trying to get out of the impact of the data abuse scandal and their investigations. Facebook shares fell sharply after the opening of Wednesday’s trading hours. About 21 per cent fell by about $ 130 billion (about 8.92 lakh crore) in the Indian currency.
FB suffered sales pressure in the wake of second-quarter results. The shares have fallen sharply as revenue and consumer growth are lower than expected. In the second quarter, the company’s profit rose 31 per cent to $ 5.1 billion, revenue rose 42 per cent to $ 13.2 billion. But it is less than estimates. Chief Financial Officer David Wahner said the shares had fallen short of expectations of a weaker recovery in the upcoming quarter.
As the company’s shares fell, CEO Mark Zuckerberg lost a personal income of $ 16.8 billion. Zuckerberg will drop to the sixth position in the Bloomberg Billionaires Index if the company shares are closed with losses in Thursday’s trading. The Facebook CEO Marc Zuckerberg said Facebook has been working hard to prevent abuse of privacy and information security. “As I’ve said on past calls, we’re investing so much in security that it will significantly impact our profitability,” Zuckerberg said. “We’re starting to see that this quarter,”
Zuckerberg revealed that Facebook had lost more than a million users in the European Union due to misuse of information.
As FB stock plummeted after hours, it also brought social-media rivals Twitter Inc. TWTR, +4.86% and Snapchat parent company Snap Inc.SNAP, +1.90% to the party, sending both stocks down by single-digit percentages. Facebook stock has gained 23% this year, as the S&P 500 index SPX, +0.91% rose 5.5%.