Facebook stock has been crumbling since NASDAQ trading started Thursday morning, having dropped 20-percent a day following the publication of the company's consolidated financial report for the second quarter of the year. As a result, the Menlo Park, California-based social media giant is on course to lose over $115 billion in market capitalization by the time today's trading ends, thus experiencing the worst stock drop in six years.
The Cambridge Analytica scandal that emerged in late March also erased tens of billions of dollars in Facebook's market capitalization but the company bounced back from the ordeal in a relatively swift manner and has been hitting new all-time highs since early July, having been valued at as much as 217.50 once NASDAQ trading closed yesterday. The comeback didn't last for long, with Facebook's second-quarter report coming with a long string of warnings to investors from the company's executives on top of missed revenue targets and disappointing user engagement rates. During Facebook's Wednesday earnings call, the firm's officials predicted weaker near-term margins due to broadening markets and aggressive investments, including those made toward improving the security of the world's largest social media network. Instagram TV, new privacy tools, extra content reviewers meant to help combat hate speech and fake news, and similar initiatives will cost Facebook billions of dollars in the coming years, Chief Financial Officer David Wehner said.
Facebook is also expecting its revenue growth to slow down by nearly ten percentage points in the final two quarters of 2018, the CFO disclosed. While the company is planning to offset its slowing growth by trying to leverage under-monetized media formats such as Instagram and Facebook stories, the overall outlook for the remainder of the year isn't positive, at least not in the sense that the Internet juggernaut expects to surpass its performance from the first half of 2018. The firm's recently launched Watch platform that's been designed to eventually take on YouTube likely isn't mature enough to be monetized in a significant manner anytime soon, according to recent reports. Facebook's shares are also likely to take a hit from currency fluctuations, though that development has been expected after the same stock benefitted from the same trend in recent quarters.