Facebook takes historic plunge as scandals finally take a toll

Facebook takes historic plunge as scandals finally take a toll

Facebook takes historic plunge as scandals finally take a toll

The startling decline comes after Facebook reported user growth and sales that fell short of investor expectations, leading many shareholders to frantically sell their stock on Wednesday night before market close. It's just about a fifth of his net worth.

Facebook's shares collapsed by 18% on Thursday when the stock market opened in NY, a day after the Silicon Valley company revealed that 3 million users in Europe have abandoned the social network since the Observer revealed the Cambridge Analytica breach of 87m Facebook profiles and the introduction of strict European Union data protection legislation.

The slump takes his personal fortune to below $70bn, and according to calculations by Bloomberg it will push him to sixth from third on the Bloomberg billionaires list. Its stock was trading at $176.26 late Thursday, down from $217.50 a share before the report was released. It reported second-quarter results on Wednesday afternoon.

"The implementation of GDPR in Europe and continued scrutiny of privacy policies following the Cambridge Analytica scandal left investors feeling uncertain about Facebook", says Aaron Goldman, CMO of 4C, a Facebook marketing partner. "We're starting to see that this quarter", he said. Monthly active users rose 11 percent to 2.23 billion - below most estimates of 2.25 billion.

Facebook has continued to suffer fallout from investigations into Russian manipulation of the platform during the 2016 USA presidential election.

Facebook forecast similar increases for the second half of the year, also citing spending on video content and marketing. It also said growth in user numbers would slow down. That goes for fake news, foreign interference in elections, and hate speech, as well as developers and data privacy. "The core Facebook platform is declining", said Brian Wieser, an analyst at Pivotal Research Group. But most experts believed the company had successfully dealt with them. Facebook is rolling out a version of those protections to the rest of the world.If users choose to share less data with Facebook, that could hamper the company's ad-targeting abilities, making it less attractive to marketers. Instagram now has more than 1 billion users, and analysts expect it to be a model for how Facebook molds its other big app purchase, WhatsApp, into a lucrative business.

Gene Munster, a venture capitalist at Loup Ventures, said in an email that Facebook is "entering a new period" where declining user growth will translate to slower revenue growth. The report also predicted far weaker growth in the future than had been expected. We expect Facebook to get back on track by the end of 2019, and expect revenues and profits to grow for many years.

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