US$120 billion was wiped off Facebook’s market value as shares plunged 19 per cent
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
Leaning into brand building is a key way IAG's NRMA and CGU businesses are getting through the COVID-19 pandemic, chief marketing officer, Brent Smart, says.
Disparate data sources, fragmented technology and a lack of funding has left many brands struggling in the battle for online customer attention amid a global pandemic. Now more than ever, brands need to focus on unlocking the value of their marketing technology.
For a while now, I have been following a fabulous design strategy and research colleague, Tatiana Toutikian, a speculative designer. This is someone specialising in calling out near future phenomena, what the various aspects of our future will be, and how the design we create will support it.
Online identity is a hot topic as more consumers are waking up to how their data is being used. So what does the marketing industry need to do to avoid a complete loss of public trust, in instances such as the COVID-19 tracing app?
Well done, team at Larsen. Fantastic story of how to continually invest in customer experience.
Adam Frank
A designer jewellery brand's take on customer relations
Great piece Katja. It will be fascinating to see how the shift in people's perception of value will affect design, products and services ...
Paul Scott
How to design for a speculative future - Customer Design - CMO Australia
Google collects as much data as it can about you. It would be foolish to believe Google cares about your privacy. I did cut off Google fr...
Phil Davis
ACCC launches fresh legal challenge against Google's consumer data practices for advertising
“This new logo has been noticed and it replaces a logo no one really knew existed so I’d say it’s abided by the ‘rule’ of brand equity - ...
Lawrence
Brand Australia misses the mark
IMHO a logo that needs to be explained really doesn't achieve it's purpose.I admit coming to the debate a little late, but has anyone els...
JV_at_lAttitude_in_Cairns
Brand Australia misses the mark