Published: Sat, July 28, 2018
Markets | By Josh Butler

After Facebook Stock Plunge, Calls for Zuckerberg's Job

After Facebook Stock Plunge, Calls for Zuckerberg's Job

Rahul Shah, chief executive officer at Ideal Asset Management in NY, a Facebook shareholder, said executives were trying to reset expectations about growth but the outlook caught Wall Street by surprise.

The loss of stock value bumped Zuckerberg from number four down to number six - six! - on Forbes' ranking of the World's Billionaires, behind Spanish fashion magnate Amancio Ortega and Warren Buffett. That push, along with advertising, is behind the 47% explosion in the employee ranks between last year's second quarter and the 2018 period.

More likely, though, market buzzards are holding off because of how quickly some analysts are turning on the company.

The news is perhaps not surprising given the context. The political research business collected private data of tens of millions of Facebook users.

The quarter was also marked by Europe's implementation of strict new data laws, which Facebook said led to fewer daily visitors in that region.

Facebook increased spending in the wake of the 2016 U.S. presidential election, which brought evidence of Russian meddling via social media. Late past year the company already issued a warning about profitability, and in April Zuckerberg admitted to Congress that the company had reacted slowly.

For instance, the company is working to ship food from Whole Foods Market stores across the United States, in an ambitious attempt to bring groceries into the age of online retail.

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North American sales were up 44 percent year-over-year to $32.17 billion, with operating income at $1.84 billion. Analysts who follow Facebook were blindsided, asking frequently on a conference call with executives for more information on exactly how the company's financial future had changed so dramatically.

Is this the start of Facebook's demise? It reached $25.91 per user, up from $23.59 during the first quarter. Monthly active users rose 11 percent to 2.23 billion - below most estimates of 2.25 billion.

But there's also been a notable slowdown in user growth.

Facebook is still growing, only more slowly.

Despite this bad news, it's hard to see Facebook actually continuing to grow its userbase. With around a third of the world already on Facebook, has it got as big as it is going to get? It still dominates the market, owning Instagram, WhatsApp and Messenger.

Facebook disclosed in a security filing it will pay the $10 million in cash, which surpasses the $7.3 million the company paid for Zuckerberg's personal security detail in 2017.

Siva Vaidhyanathan, a media studies professor at the University of Virginia and author of the new book, "Antisocial Media: How Facebook Disconnects Us and Undermines Democracy", dismissed the significance of the stock plunge.

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