Facebook Shares Drop 20%, Potentially Erasing $100 Billion of Market Capital, in 24 Hours; Drudge Calls it, “Death of the Algorithm”

Facebook Chief Executive Mark Zuckerberg -— and Facebook’s stock — weathered congressional testimony earlier this year, but couldn’t withstand a weak forecast in Wednesday’s earnings report.
Facebook Chief Executive Mark Zuckerberg -— and Facebook’s stock — weathered congressional testimony earlier this year, but couldn’t withstand a weak forecast in Wednesday’s earnings report.

Facebook Inc. appears to finally be paying for the impact of fake news in the 2016 elections and user privacy concerns, with the stunning disclosure of a revenue deceleration in the second half of this year sending shares on a mind-blowing plunge Wednesday afternoon.

During a conference call Wednesday, Facebook Chief Financial Officer David Wehner predicted bad news for the second half, and the company’s shares immediately began a drastic retreat in the extended session. Should the after-hours bloodbath continue into Thursday’s trading session, Facebook would see a $100 billion blow to its market cap after shares plunged 20%.

The decline was stunning not only because of the scale, but because Facebook had managed to avoid this type of punishment through a multitude of sins too numerous to fully list here. While the Cambridge Analytica controversy weighed on the stock, it had easily rebounded from those declines to post record highs heading into Wednesday’s report.

Even during Chief Executive Mark Zuckerberg’s congressional hearings earlier this year, the company’s shares rebounded during his testimony. Facebook seemed to have become the Teflon company, recalling references to Ronald Reagan’s Teflon-coated presidency in the 1980s.

However, when it comes to finance, the numbers matter much more than the delivery.

While investors managed to stomach the parade of bad headlines Facebook has suffered over the past year, they apparently aren’t sticking around for the effects that Wehner outlined Wednesday. Wehner told investors that Facebook’s “total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4.”

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SOURCE: THERESE POLETTI
MarketWatch