The company's earnings report showed that it is not immune to repercussions from the barrage of privacy scandals and the costs of combating abusive accounts and misinformation that it has faced. The platform has been accused of helping violence spread in Myanmar, India and Sri Lanka.
Chief operating officer Sheryl Sandberg said the sweeping European Union regulations, which Facebook 'relocated' 1.5 billion users out of reach of, hadn't had a negative impact on ad revenue yet but that she was aware it wasn't "fully rolled out" during Q2. The social network missed analysts' expectations of $13.36 billion in revenue, while Q2 2018 marked its slowest ever user growth rate. A #DeleteFacebook campaign didn't have any "material impact" on the bottom line, COO Sheryl Sandberg said earlier this year.
The startling decline comes after Facebook reported user growth and sales that fell short of investor expectations, leading many shareholders to frantically sell their stock on Wednesday night before market close.
Facebook stock has fallen 19% to $177 today, wiping out some $120 billion in wealth, less than 24 hours after it ended Wednesday's trading session at a record high.
According to the research firm eMarketer, Facebook is expected to hold an 18 percent share of the $273.29 billion worldwide digital ad market, behind Google's 31 percent. Facebook's plunge was the biggest one-day drop in value for any publicly traded company.
Facebook stock hammered after earnings miss, slow growth forecast
On Wednesday the initial fallout from Cambridge Analytica appeared in Facebook's financial results and forecast and it was a game changer. Rich Greenfield, an analyst with BTIG, issued a report titled "Facebook's Death Has Been Greatly Exaggerated (By Facebook)".
Facebook didn't respond to a request for comment. The General Data Protection Regulation (GDPR) gives an individual the right to find out whether, where and for what goal their personal data is being processed. "This is our responsibility to keep people safe". 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.
Mark Zuckerberg did his best in the earnings call to try to spin this decline as something positive for investors-as if making less money was an active choice the company was pursuing to benefit consumers, rather than a side-effect of everything it's being forced to do in the face of growing public concerns.
Yesterday, BuzzFeed published a memo by chief security officer Alex Stamos written to staff in March after the initial Cambridge Analytica stories broke in which he urged the company to pick sides on important issues.
On the call, Jefferies & Co. analyst Brent Thill said that "many investors are having a hard time reconciling that deceleration". But the ongoing scandals have caused many people to take another look, he said. "This is not okay'".