World’s most popular social media company Facebook is facing a difficult time after the data breach case. Facebook lost over $150 billion in valuation in two hours on Wednesday, making it history’s biggest slump. This came after Facebook announced its slowest-ever user growth rate. Note that this fall is more than the market cap of India’s most valuable company TCS ($110 billion).
CEO Mark Zuckerberg’s net worth also dipped by $16.8 billion. If this continues in Thursday’s market, he will slide to 6th place from third on the Billionaires Index.
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Previously, the 2nd-quarter results gave a sign that something like this will happen as the new European privacy law and a succession of privacy scandals involving Cambridge Analytica and other app developers have hit Facebook badly in the recent past.
Operating profit margin, which fell to 44% in the 2nd quarter from 47% in last year, will go down to the “mid-30s” for more than two years, Chief Financial Officer David Wehner said in an interview. Last time Facebook saw such a downfall in 2012 when the shares fell over 12 percent in a single day.
Facebook’s daily active users in Europe have declined by 3 million after the new rules. Worldwide daily user growth for Facebook has declined for 6th straight quarter and has come near to 1.5 billion users in the second quarter. TO cope up with the decrease in popularity of Facebook, Mark is targeting Messenger, WhatsApp, and Instagram.
Gene Munster, a venture capitalist said that Facebook is “entering a new period” where declining user growth will translate to slower revenue growth. “ Facebook has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter,” he added.
