Facebook shares plunge really bad this time!
On Thursday, Facebook Inc., Chief Executive Officer Mark Zuckerberg’s fortune took a fall of more than $ 15 billion. The social media giant noticed the biggest one day wipeout in the U.S. stock market history. This comes a day after its executives forecasted, years of lower profit margins.
According to sources, a number of 16 brokerages cut their price targets on Facebook. The managers at Facebook said the cost of improving privacy safeguards and the very slow growth of the firm in the advertising markets, would hit the company’s profit margins in the coming years.
The shares went down as much as 19.6 percent to the tune of $ 174.78 in early trading, a decline that would wipe about $ 124 billion off the company’s value. Also, it is nearly four times the entire market capitalization of Twitter Inc.,
The company owned Instagram app, which is not really affected by Facebook’s privacy concerns, would not be enough to repair the damage
According to the second quarter results of Facebook, a string of privacy scandals involving Cambridge Analytica and other app developers are hitting the company’s business. The Chief Financial Officer of Facebook, David Wehner said over the next several years, we would anticipate that our operating margins will trend towards the mid 30s on a percentage basis.
However, a few analysts said Facebook is involved in too many scams and it would took a lot of time to come clean. Unlike Netflix, whose quarterly shortfall we saw as temporary, here we see an evolution of the story, albeit a portion of which we expected, said Daniel Salmon, analyst at BMO Capital Markets. Bears win this quarter … but not the war, said Brent Thill, an analyst with Jefferies. The shares of Facebook fell to 44 percent in the second quarter from 47 percent a year ago.
As far as Facebook’s market capitalization is concerned, the social media giant was worth $ 629.6 billion yesterday. The company is now worth $ 506.2.
To be more precise, Facebook lost an enormous $ 123.4 billion in value overnight.