Amid ongoing PR woes, Facebook Inc.
Amid ongoing PR woes, Facebook Inc. lost over $100 billion in stock market value on Wednesday after executives warned that the company’s profits would plummet over the next few years as a result of its much-publicized crackdown over privacy concerns as well as a slowdown in usage in big advertising markets.
CNBC has the Wall Street-stunning numbers, which it suggests is a result of the company’s struggles with “data leaks and fake news scandals”:
Reuters presented the stock market collapse in even more dramatic terms Wednesday, estimating that Facebook was poised to lose “over $150 billion” and as much as a quarter of its value. Reuters also points to the data leak scandals, particularly Cambridge Analytica, as the ultimate source of Facebook’s financial struggles.
“The plummeting stock price wiped out as much as $150 billion in market capitalization and erased the stock’s gains since April when Facebook announced a surprisingly strong 63 percent rise in profit and an increase in users,” Reuters reports. “If the share drop holds on Thursday, it would be Facebook’s largest single-day decline, topping a 12 percent decrease in July 2012.”
The market-shaking drop in value is a result of CFO David Wehner revealing that the company’s operating profit margin fell to 44% in the second quarter (a 3% drop over last year) and projecting that it would drop all the way to the “mid-30s” for more than two years, Reuters notes. (Read more of Reuters analysis here .)
Amid the grim projections, some shareholders are attempting to check Zuckerberg’s power over what they describe as his “mishandling” of the various scandals that have plagued the company in recent years. Business Insider reports that on Wednesday, Investment company Trillium Asset Management filed a proposal to separate the chair and CEO positions, both of which Zuckerberg currently holds.
“Separating the chair and CEO positions reduces this conflict, and an independent chair provides the clearest separation of power between the CEO and the rest of the board,” the proposal states.
Meanwhile, Bloomberg reports that Facebook CEO Mark Zuckerberg personally lost about 20% of his fortune on Wednesday, around $16.8 billion, which the outlet blames generally on “user disenchantment with Facebook Inc.” If those losses hold through the close of Thursday, Zuckerberg “will slide to sixth place from third on the Bloomberg Billionaires Index,” the outlet notes, and he would lose his $13.7 billion of gains for the year, “leaving him with just less than $70 billion.”
