Facebook loses $130 bn in just two hour, Zuckerberg $17 bn

Mark Zuckerberg the real face of Facebook

While it is true that Facebook's loss of $119 billion in a day is the biggest one-day drop in USA stock market history, it should be noted that the large loss is partly due to Facebook's massive valuation as a company.

In a sign of just how bullish investor expectations were, though, the collapse merely returned Facebook shares to a level last seen in early May.

After falling overnight on Wednesday, Facebook shares were down as much as 19.6pc at $174.78 each in early trading yesterday in the United States, a decline that would wipe about $124bn off the company's value - or almost four times the entire market capitalisation of Twitter. The company also reported a second-quarter profit of $2.5 billion (roughly Rs. 17,100 crores), its largest ever.

Other prominent social media slid Thursday afternoon. CEO Mark Zuckerberg has defended Holocaust deniers.

"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.

He subsequently backtracked from this comment after it triggered widespread public outcry.

Despite this bad news, it's hard to see Facebook actually continuing to grow its userbase.

Breaching customers' trust by using and/or distributing their personal information is reportedly having more of a negative effect on Facebook's subscriber base in Europe than in North America. But the results followed a period in which data-privacy issues came under harsh scrutiny, with Zuckerberg testifying before Congress for hours on the company's missteps.

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Facebook shares have already been through a rollercoaster of ups and downs this year, with the biggest slump coming in April after it emerged data from tens of millions of users had been acquired by Cambridge Analytica.

Facebook's stock plummeted following a dire second quarter briefing focusing on slowing ad market growth and increased spending on data security following the Cambridge Analytica scandal and new European Union privacy rules.

The proposal by Trillium Assets Management, which manages about $11 million in Facebook stock, said an independent chairman is needed to break up Zuckerberg's conflicting dual role as chairman and chief executive officer.

Facebook has recorded the biggest fall in corporate history as its value plunged by $120bn, when markets opened in NY. For Mark Zuckerberg, it's just about a fifth of his net worth. All of this was enough to spook investors in the shares on the Nasdaq when the market opened on Thursday morning.

Facebook's grim forecast predicts that margins will be much lower for the next few years due to "more choices around data privacy" as well as currency market predictions and the GDPR, according to a statement made by Facebook CFO David Wehener during the earnings call.

In contrast to Facebook, Amazon on Thursday in the U.S. reported a record profit and forecast plowing past analyst estimates.

The sudden drop also amounted to a test of investor faith in the class of giant, technology-focused stocks that have carried the market for much of the year. Amazon.com Inc fell 2.8 percent ahead of its own results report later on Thursday. In case of the latter, Wehner noted that "total expense growth will exceed revenue growth in 2019", pushing down operating margins.

Even so, Faceboook's crash dwarves that of the previous record holder, Intel, who lost $91 billion (£69 million).

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