Facebook Inc, the fifth-largest global stock by market capitalization, collapsed 18.96 per cent on Thursday, the biggest one-day wipeout in U.S. stock market history, after the social media company’s earnings report showed slowing usage in the biggest advertising markets.
Chief Executive Mark Zuckerberg’s fortune took an almost US$16 billion hit as the declines wiped more than US$120 billion off the company’s value.
The company told Wall Street Wednesday the numbers won’t get any better this year. Chief Financial Officer David Wehner said revenue growth rates would decline in the third and fourth quarters. Analysts who follow Facebook were blindsided, asking frequently on a conference call with executives for more information on exactly how the company’s financial future had changed so dramatically.
“I think many investors are having a hard time reconciling that deceleration,” Brent Thill, an analyst at Jefferies LLC, told Facebook executives, asking for a little more clarity on the reasoning. “It just seems like the magnitude is beyond anything we’ve seen, especially across a number of the tech (companies) we cover.”
Before the results, Facebook had 44 buy ratings, two sells and two holds. A few analysts tempered their outlook Thursday.