Facebook stock plunge: Brief setback or portent of trouble?

Randal Sanchez
July 30, 2018

Facebook chief executive Mark Zuckerberg's fortune took a more than $15 billion (£11.44 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.

Facebook shares plunged by 19 percent on Thursday, wiping off about 120 billion dollars off its market capitalization.

The lawsuit seeks class-action status and unspecified damages.

Overall, technology giants - Facebook, Apple, Google, Amazon and others - have enjoyed nearly unprecedented growth in revenue and stock price for years.

The stock initially dropped by 9 percent on Wednesday night due to a slow decrease in revenue recently.

Facebook is also dealing with dozens of suits over its handling of user data in connection with the United Kingdom firm Cambridge Analytica. Since then, many have been consolidated in the federal court in San Francisco.

According to the complainant, the marketplace was "shocked" when "the truth" began to emerge on Wednesday from the Menlo Park, California-based company. Though the company boasts a massive 2.23 billion users, the growth in active daily users has fallen from 17% a year ago, to 11%. He said that it stemmed from various federal securities law violations by the company.

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Thursday's plunge also hit Zuckerberg's bottom line.

Buffett now ranks third among the world's billionaires, while Zuckerberg is sixth.

The fall came after the social media giant revealed three million European users had closed their accounts since the Cambridge Analytica data scandal. The sell-off followed an earnings report showing growth in users and ad revenue had been slower than expected.

"We own it for its leadership in the tech industry", he said.

After the Facebook had reported decline in company's second- quarter earnings, many of its investors dumped its shares.

Shares in Alphabet closed up 0.7%, while those in Apple fell 0.3% and Netflix closed barely higher.

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