Facebook lost about $119 billion of its value on June 26th, marking the biggest one-day loss in U.S. market history. The company's shares plunged $41.24, or almost 19 percent, to $176.26 a day after the social media giant reported disappointing results. The slide is the largest decline in market capitalization in history, exceeding Intel's $91 billion single-day loss in September 2000, according to Bloomberg data. Founder and CEO Mark Zuckerberg saw his fortune drop by $15.9 billion to roughly $71 billion.
Here are some reasons why:
1. Facebook's slowing growth
One of the key take-aways is that Facebook’s growth is slowing. The company had been delivering solid double-digit growth every single quarter, but in Q2, its year-over-year growth slowed down to 11%. What’s more, quarter-over-quarter, growth in the U.S. and Canada was flat, and user numbers in Europe even declined.
This shouldn’t come as a surprise: Facebook is now being used by 2.23 billion users around the world every month. That’s already close a third of the world’s total population, and an estimated 62% of the world’s internet users. Facebook has been investing into helping to expand internet usage around the world to grow its potential audience, but ultimately, the company is set to hit a ceiling.
2. Stories and Watch have fewer ads
Facebook forecasts that the company’s revenue growth would decelerate over the coming quarters, and that operating margin would sink fdue to big investments in security and content moderation.
Facebook started to add Stories to many of its apps two years ago after the format proved popular on Snapchat. This successfully stopped Snapchat’s growth, to the point where now twice as many people use Stories on Instagram as Snapchat. However, Stories have a lighter ad load, and as such, don’t make Facebook as much money as its traditional newsfeed.
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