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More than $ 110 billion (£ 84 billion) were stripped of Facebook's market value, including $ 16 billion for the fortune of its founder, Mark Zuckerberg, after the company announced that user growth slowed The Cambridge Analytica scandal
Facebook's shares plummeted 18% Thursday afternoon in New York, a day after the Silicon Valley company revealed that 3 million users had abandoned the social network . The collapse of Facebook's share price places the social network on the way to the biggest one-day drop in the market value of a company. Shares fell to $ 177, valuing the company at $ 508 billion, down $ 111 billion from a record $ 619 billion on Wednesday.
The biggest collapse occurred in 2000, when Intel lost $ 91 billion in one day. The amount of money cleared of Facebook's market value on Thursday is equivalent to almost all of McDonald's or almost three times more than Tesco.
The biggest loser is Zuckerberg, who owns nearly 17% of the company and whose paper fortune has gone from $ 86.5 billion to $ 71 billion, which has made the third person fall richer from the planet to the sixth. The collapse came after the company told investors to expect a significant decline in the growth rate, and revealed that the number of users in Europe had gone from 282 million to 279 million. million.
David Wehner, chief financial officer of Facebook, said Wednesday that the company's decision to give users more choice in data privacy after the Cambridge Analytica scandal "could have an impact on our revenue growth. ". 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 earnings growth in 2019. "
He told investors to expect a sharp increase in costs related to his efforts to improve data processing and an advertising campaign to reassure users.
Last quarter's costs increased by 50% to $ 7.4 billion. The company has spent considerable sums of money to improve data security and strengthen monitoring of the site after Zuckerberg admitted that Facebook had been too slow to respond 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. April. "Our sophistication in managing these threats is growing and improving rapidly."
Zuckerberg was dragged in front of Congress to answer questions about the data breach scandal, in which information from 87m user profiles, the majority based in the United States, was collected. by Cambridge Analytica in targeted political advertising. Facebook has also been the subject of an 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 the suspicious content on the site. 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.
Zuckerberg refused to appear before MPs in the UK. as a result of the Cambridge Analytica data breach. Information Commissioner Elizabeth Denham fined Facebook £ 500,000 earlier this month for violating the data law.
"Facebook has not provided the kind of protection they are required 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 win the fine.
Colin Sebastian, an analyst at US-based Baird, said Facebook's shares had fallen after the company "dropped two bombs" during a conference call with analysts after the publication of his results 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," Sebastian said. "It's important to note that these are self-inflicted problems as Facebook sacrifices monetization of apps to encourage the use / engagement of Stories."
Brent Thill, an analyst at Jefferies, told Zuckerberg are struggling to reconcile this deceleration "revenue." It seems that the scale is beyond anything we have seen, particularly across a number of technologies [companies] that we cover, "he said during the conference call with key Facebook executives.
At the beginning of the call, before the stock begins to s & # 39; In the secondary market, Zuckerberg described the results as "a good quarter" and talked about the "incredible success" of the company.
On Wednesday night, Zuckerberg will be removed from his position as president of the network because of its "mismanagement" of the Cambridge Analytica crisis
Trillium Asset Management, a small activist investor who has already questioned the role of Zuckerberg's chairman and CEO, said Zuckerber g could have "contributed to Facebook lacked, or badly, a number of serious controversies, increased risk"
"A CEO who also serves as chairman may exert undue influence on the board of directors and on its agenda , thus weakening management oversight by the board of directors, "said Trillium. "Having an independent chair helps the board fulfill its primary duty – overseeing the management of the corporation on behalf of its shareholders."
However, the proposal was unlikely to succeed since Zuckerberg holds class B shares that give him a majority. voting power in corporate governance. Last year, 51% of independent investors voted to oust Zuckerberg as president.
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