Facebook takes historic dive

US$120 billion was wiped off Facebook’s market value as shares plunged 19 per cent

Facebook founder Mark Zuckerberg
Facebook founder Mark Zuckerberg

Facebook has suffered the biggest one-day wipeout in US stock market history one day after executives forecast lower profit margins.

Shares closed down almost 19 per cent at $176.26, wiping more than $120 billion off the company's value.

The wipeout comes after the social media giant announced it missed revenue expectations and growth is expected to be far weaker than anticipated.

During a routine analyst call, Facebook CFO, David Wehner, reportedly shocked analysts by saying the company faced a multi-year squeeze on its business margins. Executives warned about reduced revenue, tightening margins and the ongoing effects of privacy policy changes.

Facebook's margin fell to 44 per cent in the second quarter from 47 per cent a year ago. The company announced it spent heavily on security and related initiatives to protect the privacy of its consumers. 

Socialbakers' CEO, Yuval Ben-Itzhak, weighed into the discussion about Facebook’s Q2 earnings and what it means for the industry. 

“Facebook’s Q2 results came as a surprise but with 2.2 billion monthly active users Facebook is still the platform where most consumer engagement with brands is happening in the digital world. Despite growth being slower in Q2, Facebook’s daily and monthly user counts were up 11 per cent year-over-year,” Ben-Itzhak said in a statement to CMO

“This kind of growth at the scale of Facebook should still not be ignored. The market’s reaction to Facebook’s results feels nervous in the light of Cambridge Analytica and GDPR, however, we are still seeing marketers spending consistently on the platform, especially on Instagram."

He said Instagram, in particular, has emerged over the last year as an advertising powerhouse and revenue generator for Facebook.

“In June the platform hit one billion monthly users, and in comparing Facebook and Instagram ad share, we saw that Instagram’s share of ads has gone from 10 per cent to more than 50 per cent in just over a year. Social performance data shows that Instagram has become the most powerful platform for brands, making it very important to Facebook’s overall growth – today and in the future.”

He said since Facebook’s Q1 earnings and post Cambridge Analytica, Facebook has ramped up its efforts to become as transparent as possible.

“From the roll-out of Instagram verification badges in Australia to its recent announcement of a new View Ads tool, which provides a public list of all ads currently running on Facebook, Instagram and Messenger, transparency is key to the future of Facebook.

“These are all steps in the right direction to ensure that users are having an authentic experience. Authenticity should be the cornerstone to a good social media marketing strategy. In the fake news era, users want to know that the content they see comes from credible, trustworthy sources.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu 

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

Building a human-curated brand

If the FANG (Facebook, Amazon, Netflix, Google) sector and their measured worth are the final argument for the successful 21st Century model, then they are beyond reproach. Fine-tuning masses of algorithms to reduce human touchpoints and deliver wild returns to investors—all with workforces infinitesimally small compared to the giants of the 20th Century—has been proven out.

Will Smith

Co-founder and head of new markets, The Plum Guide

Sustainability trends brands can expect in 2020

​Marketers have made strides this year in sustainability with the number of brands rallying behind the Not Business As Usual alliance for action against climate change being a sign of the times. While sustainability efforts have gained momentum this year, 2020 is shaping up to be the year brands are really held accountable for their work in this area.

Ben King

CSR manager & sustainability expert, Finder

The trouble with Scotty from Marketing

As a Marketer, the ‘Scotty from Marketing’ meme troubles me.

Natalie Robinson

Director of marketing and communications, Melbourne Polytechnic

It's a pretty interesting article to read. I will learn more about this company later.

Dan Bullock

40 staff and 1000 contracts affected as foodora closes its Australian operations

Read more

If you think it can benefit both consumer and seller then it would be great

Simon Bird

Why Ford is counting on the Internet of Things to drive customer engagement

Read more

It's a good idea. Customers really should control their data. Now I understand why it's important.

Elvin Huntsberry

Salesforce CMO: Modern marketers have an obligation to give customers control of their data

Read more

Instagram changes algorithms every time you get used to them. It really pisses me off. What else pisses me off? The fact that Instagram d...

Nickwood

Instagram loses the like in Australia; industry reacts positively

Read more

I tried www.analisa.io to see my Instagram Insight

Dina Rahmawati

7 marketing technology predictions for 2016

Read more

Latest Podcast

More podcasts

Sign in