Facebook is sued after stock plunge 'shocked' market

Facebook's monthly active user count was 2.23 billion slightly behind the 2.25 billion forecast by analysts

At that point, the stock was still recovering from an earlier battering over its big privacy scandal, in which a political consulting firm with ties to President Donald Trump improperly accessed the data of tens millions of Facebook users.

Investors dumped Facebook shares after the company reported disappointing second-quarter earnings, in which the company warned of a sharp slowdown in sales growth in coming quarters along with rising spending on security and privacy enhancements. Microsoft dropped $80 billion in 2000 as well.

During the call, Facebook's stock dropped precipitously.

While privacy was an issue in Europe, politics played a role in North America, which is the company's most lucrative advertising market. Their median target price is $219.30 a share.

"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.

Richard Windsor, a technology analyst who writes the Radio Free Mobile blog, said the new outlook should not be surprising.

Mobile advertising continued to to show gains, representing 91% of total ad sales, up from 87% in the second quarter of 2017.

Facebook hit the headlines earlier this year when it came to light that Cambridge Analytica had used data, harvested from Facebook users, to target United States voters with personalised political advertising, based on psychological profiles.

Mark Zuckerberg
Mark Zuckerberg

"T$3 he number of daily active users on the platform - an important metric for judging the success of a website or app - only grew by 22 million - the lowest growth figure since 2011", Breitbart News divulged.

Read the full story at Fox News. "That's going to have a negative impact on revenue growth", he noted.

But that staggering statistic wasn't enough to distract investors from the bad news the company had to share: It expects significantly decreased revenue growth rates and operating margins in the years ahead. Yet both categories are facing headwinds.

"The company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter", said Gene Munster of Loup Ventures.

Facebook shares fell another 0.8 percent on Friday, closing at $174.89 on the Nasdaq.

So is it time to unfriend Facebook?

And in the view of BTIG analyst Rich Greenfield, Facebook is making an investment that will pay off down the road. Facebook reported its slowest growth rate ever, with 2.23 billion people logging in at least once a month in June, below the 2.25 billion analysts expected. "Legacy media executives. should not be rejoicing - they should be afraid, very afraid".

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