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Facebook suffers £83 billion financial blow following Cambridge Analytica scandal

28 July, 2018, 19:53 | Author: Lawrence Cooper
  • Facebook is beefing up its suicide prevention tools including new options for people to report if someone might harm themselves while broadcasting on Facebook Live

The social media company's financial results, released late Wednesday, fell short of Wall Street expectations as the company continues to grapple with privacy issues. It would also wipe his $13.7 billion of gains for the year, leaving him with just less than $70 billion.

The new laws were only in effect for one month of the quarter, which means the company may feel more of an impact in the current quarter.

Facebook has faced dozens of lawsuits over its handling of user data in a scandal also concerning the United Kingdom firm Cambridge Analytica. Facebook's stock price now stands at $176.26, having dropped by a massive 18.9% from the $217.50 value that it stood at before the company's earnings call. "While it is true that Facebook's loss of $119 billion in a day is the biggest one-day drop in USA stock market history, it should be noted that the large loss is partly due to Facebook's massive valuation as a company".

And despite a number of concerns, including the trade tensions surrounding the United States and its largest trading partners as well as the Federal Reserve's increases in interest rates, the S&P 500 is up more than 6 per cent this year and is only about 1 per cent below its high hit on January 26. The decline in Facebook's market value was roughly equivalent to the entire value of some of the country's best-known companies, including McDonald's, Nike and industrial conglomerate 3M.

Facebook has been playing favorites with certain users and companies who lean left politically, silencing pro-Trump people and companies including the influential Diamond and Silk. "And it reflects that many people use more than one of our services", he said.

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After all, from what little we know, the kids these days seem to be into Snapchat and Fortnite rather than posting semi-snide comments about the bridesmaid dress your friend has just got for Aunty Edwina's third marriage.

RBC Capital Markets analyst Mark Mahaney said the drop creates a rare buying opportunity for Facebook shares.

'The real concern is the revenue trajectory, ' one investor told the Financial Times when asked about Facebook's share price. The company was bombarded by public criticism over its content policies, especially in countries such as Myanmar and Sri Lanka where misinformation has led to violence. And it continued to suffer fallout from investigations into Russian manipulation of the platform during the 2016 USA presidential election. "The core Facebook platform is declining", said Brian Wieser, an analyst at Pivotal Research Group. Worldwide daily user growth for Facebook's namesake service slid for its sixth straight quarter, bringing it to almost 1.5 billion users in the second quarter.

Facebook saw slower daily active user growth that grew by only 22 million, which is pretty bad considering the last time Facebook saw these numbers was all the way back in 2011.

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