Zuckerberg loses $16.8 bn as Facebook stock plunges 21%
26 Jul 2018
Facebook shares crashed in after-hours trade on Wednesday, wiping out 21 per cent or about $130 billion of its market value on the back of disappointing results, bringing down founder Mark Zuckerberg’s fortunes by $16.8 billion.
Menlo Park, California-based Facebook said its second-quarter revenue and average daily visitors declined.
The company’s revenue increased 42 per cent to $13.2 billion while profit was up 31 per cent in the second quarter at $5.1 billion, although slightly below most forecasts.
The decline in revenues come as the company grapples with new data laws in Europe, criticism over its content policies and privacy issues.
Facebook shares opened lower in the New York market today and if that holds through the day, Zuckerberg will see his wealth slide to sixth place from third. It would also wipe out $13.7 billion of the year’s gains.
Zuckerberg said his company has been investing heavily in "safety, security and privacy"..."We run this company for long term, not for next quarter," he said.
The company’s chief financial officer David Wehner had also warned of a weaker outlook in the coming quarter. Wehner said revenue growth "decelerated" in the second quarter and will decline "by high single digit percentages" and added that "we are also giving people who use our services more choices around data privacy which may have an impact on our revenue growth."
Facebook shares had slumped following the Cambridge Analytica scandal earlier this year, but the stock had risen sharply and hit record levels this month.
Zuckerberg said Facebook lost around one million users in Europe amid the implementation of new EU data protection rules, but noted that many Europeans "want to use context from ads," suggesting they are opting into allowing data collection for advertising purposes.
Almost all of Facebook's revenue - $13 billion of the total $13.2 billion - came from online advertising.
Facebook-owned Instagram is making up for some of the slowdown in growth at the social network and is expected to generate $8.06 billion in worldwide ad revenue this year.