Facebook losses $120 billion on data breach allegation, weak results

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Business news author and curator at The Indian Wire.

On Thursday, after Facebook failed to meet revenue expectations by a narrow margin in the second quarter, the social media company’s shares plunged by almost 19%, which took roughly $120 billion off of Facebook’s market value. CEO Mark Zuckerberg personally lost as much as of $15 billion immediately after the earnings call.

Investors, who’d grown used to Facebook’s never-ending revenue growth, seemed to be wary of investing in the company after the company reported a 42% revenue growth to $13.2 billion, which was lesser than Wall Street estimates of $13.3 billion. The shares fell as low as $173, and finally closed at $176.26.

Even though the numbers don’t sound bad, the company’s growth has slowed dramatically over the past few months. This could be because of the ongoing controversies surrounding the social media company, including concerns regarding privacy (Hello, Cambridge Analytica), and its inability to curb fake news across the globe.

Zuckerberg, commenting on the Cambridge Analytica scandal, has previously said, “We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together”. Since then, Facebook has and continues to invest heavy amounts of money into content moderation, in a bid to control the flow of ‘bad posts’ or ‘fake news’, shifting the News Feed content to posts from friends and family, rather than posts from brands and other pages.

Just before the revenue report was published, Facebook had warned analysts that the expected revenue growth rates might not be as expected, which led to analysts downgrading the company’s stock.

However, despite his staggering $15 billion loss, it is unlikely that Zuckerberg is worried about it. Facebook still has a network of over 2.5 billion people across the globe, and Zuckerberg’s net worth after his losses is at $71 billion, landing him at the 5th position on the Forbes World Billionaires list.

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