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More than $ 118 billion was erased from Facebook's market value, including $ 16 billion for the fortune of its founder, Mark Zuckerberg, after the company announced that user growth had slowed in the wake from Cambridge. The Analytica Scandal
Facebook shares plummeted 19.5% on Thursday when the stock market opened in New York City, a day after the Silicon Valley company revealed that 3 million users in Europe had abandoned the social network. of 87 million Facebook profiles and the introduction of strict legislation on data protection of the European Union
The collapse of the share price of Facebook places the social network on the path of the largest decline in the market value of a company. Shares fell to $ 175 early on Thursday, valuing the company at $ 501 billion, down $ 118 billion from a record $ 619 billion on Wednesday. The biggest previous collapse occurred in 2000, when Intel lost $ 91 billion in one day
The biggest loser is Zuckerberg, who owns nearly 17% of the company and whose fortune has dropped from 86, $ 5 billion to $ 70 billion. The collapse came after the company told investors to expect a significant decline in the growth rate, and found that the number of users in Europe had gone from 282 million to 279 million.
David Wehner, Facebook's chief financial officer, said Wednesday that the company's decision to "give more choice to data privacy" after the Cambridge Analytica scandal "could have an impact on the growth of our income. " Total revenue growth rates will continue to slow in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages in previous quarters, both in the third quarter and the third quarter. in the fourth quarter. "" Beyond 2018, we expect total spending growth to exceed revenue growth in 2019. "
He told investors to expect a big jump in costs related to his efforts to improve data processing and an advertising campaign to rebadure users.
Last quarter's costs increased by 50% to $ 7.4 billion as the company spent considerable money to improve data security and strengthen site monitoring after Zuckerberg admitted to Congress American that she was too slow to react to Russian interference. in the run-up to the 2016 presidential election.
"We were too slow to spot and react to Russian interference, and we are working hard to get better," said Zuckerberg during the presidential election. a testimony before the House Energy and Trade Committee in April. "Our sophistication in managing these threats is growing and improving rapidly."
Zuckerberg was brought before Congress to answer questions about the data scandal, in which 87 million profiles of the same kind were found. users were harvested before the 2016 elections. Facebook is also under investigation by the FBI, the Department of Justice and the Securities and Exchange Commission.
Zuckerberg said his company was aiming to hire 20,000 people by the end of the year to strengthen his security and help revise suspicious content. . He hired additional bodies at a huge rate, with his staffing increasing 47% since last year to more than 30,000 people.
"For the future, we will continue to invest heavily in security and privacy because we have a responsibility to protect people," he said last night.
Zuckerberg refused to appear before MPs in the UK despite the threat of a formal summons as a result of the Cambridge Analytica data breach. Information Commissioner Elizabeth Denham fined Facebook £ 500,000 earlier this month for violating the data protection law.
"Facebook has not provided the kind of protection they need under the Data Protection Act," she said. "Fines and lawsuits punish bad actors, but my real goal is to bring about change and restore confidence in our democratic system."
Facebook's revenues are such that it would only take him five and a half minutes to make money to pay the fine.
Colin Sebastian, an badyst at Baird, said that Facebook's stock had fallen after the company "dropped two bombs" during a conference call with badysts after it released its earnings on Wednesday. "A significant slowdown in revenue growth for the third and fourth quarters, followed by a decline in operating margin over the next three years," Baird said. "Importantly, these are" self-inflicted "issues to a large extent because Facebook is sacrificing monetization of core apps to boost the use / engagement of stories.
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