Facebook Suffers Largest Loss In US Stock Market History

The stock markets witness a lot of action just about every day but Thursday – July 26 will be a day that Facebook stakeholders will remember forever. When the markets closed on Wednesday, the social media giant had $630 billion net worth.

Less than 24 hours later, the company witnessed a significant drop and finished with a net worth of $510 billion. That is a massive loss of $120 billion in just a 24 hour period.

Facebook’s massive plunge in stock prices is a monumental loss. No company in the United States has lost more than $100 billion in a single day.

Financial Times

There have only been two other companies who witnessed such a major plunge. Microsoft lost around $80 billion in March 2000 with the dot-com crash. This loss was beaten by Intel later in the same year. In September 2000, the chip manufacturer reported lower European demand and lower projected revenue growth. The result was a loss of $90 billion.

Facebook stock declined by 19 percent at the end of Thursday's trading. This is the biggest drop that the company has experienced ever since it went public in 2012. This is not the first time that Facebook stock has lost value this year. When the Cambridge Analytica scandal came out, stock value for the company dropped but it was just a small drop. Things got better for Facebook as its stocks rallied but the latest hit has set the company and its investors back significantly.

Reports Of Low Revenue Triggered The Drop

This drop came after Facebook reported a weaker-than-expected revenue for the second quarter 2018. Facebook reported sales of $13.04 billion for the second quarter which looks good on paper but was nevertheless very much below what market analysts were expecting.

The report also detailed that number of daily active global users, which is one of Facebook's important metrics has also dropped. Additionally, growth in both US and Canada markets was flat, while European markets reported a decline. The decline in European areas can be blamed on the new General Data Protection Regulation implemented by the European Union.

The trigger that caused the drop was when Facebook's Chief Financial Officer David Wehner said that the company expected a slower revenue growth in the third quarter.

In a statement, Wehner said

Our total revenue-growth rates will continue to decelerate in the second half of 2018, and we expect our revenue-growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4

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