Facebook stock plunge: Brief setback or portent of trouble?
By BARBARA ORTUTAY
AP Technology Writer
NEW YORK — Thursday’s massacre of Facebook shares, which plunged 19 percent in the biggest one-day drop in history, answered one big question. The stock, it turns out, can fall every bit as fast as it rises.
But others await. Is this a temporary setback for the giant social network, or the start of a painful new journey? And does it portend similar trouble for other high-flying tech giants?
The Thursday stock collapse vaporized $119 billion of the company’s market value. CEO Mark Zuckerberg saw his net worth fall by roughly $16 billion as a result.
Yet the decline merely returned Facebook shares to a level last seen in early May. At that point, the stock was still recovering from an earlier battering over a major privacy scandal. Investors had been piling into the stock ever since. In fact, on Wednesday the shares hit a new record high before retreating.
Late Wednesday, Facebook warned that its revenue growth will slow down significantly for at least the remainder of the year and that expenses will continue to skyrocket.
The earnings covered the company’s first full quarter since the Cambridge Analytica privacy scandal erupted. But analysts attributed the user growth shortfall largely to European privacy rules that went into effect in May, not to the furor over the political consulting firm with ties to President Donald Trump, which improperly accessed the data of tens millions of Facebook users.