Facebook shares dived nearly 20 percent early today after it signaled it expects weaker growth, pushing the Nasdaq decisively lower. The social media giant suffered its worst day as a public company with shares trading as low as $173.75 on Thursday and ended the trading session at $176.26.
About five minutes into trading, the tech-rich Nasdaq Composite Index was at 7,860.84, down 0.9 percent, falling from Wednesday’s record close. The Dow Jones Industrial Average rose 0.4 percent to 25,513.78, while the broad-based S&P 500 dipped 0.3 percent to 2,838.73. Facebook lost $100 billion in market capitalization since announcing its results.
This is the biggest loss for a tech company in the stock market history and it comes at a time when investor confidence on the company is dying. The lack of confidence is also owed to increased scrutiny around the operations of the company.
Facebook‘s earnings saw company’s active user base grow to 2.5 billion users but daily and monthly active users declined. The company also missed out on key metrics and its leadership suggested that things might get difficult from here. Facebook said its daily active users fell from 282 million to 279 million during second quarter. The decline in its user base seems related to implementation of General Data Protection Regulation (GDPR) in the European Union.
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The daily active user base remained flat in North America and its projection for revenue from advertising was much lower than street estimates. At least three analysts have downgraded the stock after earnings call, reports CNBC. The continued scrutiny around its business practice, especially after Cambridge Analytica, could hurt the company further over the next few quarters.
With inputs from PTI and AFP.