*CALIFORNIA – Facebook’s stock price crashed by 19 percent and erasedabout $120 billion in market value, is the largest one-day drop in thehistory of the American stock market.*
Facebook shares fell as much as 23 percent in after-hours trading whenFacebook reported its second-quarter earnings. While revenue increased 42percent in the quarter, it still missed analysts’ projections.
More worrisome was the number of daily active users, which grew by just 22million — the lowest such number since at least 2011. Facebook’s chieffinancial officer warned that revenue growth would “decline by highsingle-digit percentages” for the rest of the year.
Facebook’s decline significantly outpaced the $91 billion that Intel lostin September of 2000, during the original dot-com bust. Microsoft lost $77billion in a day during the dot-com bust, according to Bloomberg.
Facebook has faced a series of crises over the past two years, startingwith Russian interference on the platform during the 2016 election andcontinuing with this year’s Cambridge Analytica data privacy scandal. Theintroduction of the General Data Protection Regulation in Europe cost thecompany 1 million users after it rolled out, Facebook said.
In response to concerns over privacy, fake news, and hate speech, Facebookvowed to hire 20,000 new employees to work on security and moderationissues. That has cut into Facebook’s revenue growth at the same time thatit has saturated its core North American market. Facebook has remained at185 million users in the United States and Canada for the past twoquarters, forcing it to look for growth elsewhere.