Zuckerberg loses $16 billion in record Facebook fall
By Vibhuti Sharma and Munsif Vengattil (Reuters) - Facebook Inc Chief Executive Officer Mark Zuckerberg's fortune took an almost $16 billion hit on Thursday, as the social media giant headed for the biggest one-day wipeout in U.S. stock market history, a day after executives forecast years of lower profit margins
By Vibhuti Sharma and Munsif Vengattil
(Reuters) - Facebook Inc
At least 16 brokerages cut their price targets on Facebook after Chief Financial Officer David Wehner startled an otherwise routine call with analysts by saying the company faced a multi-year squeeze on its business margins.
That "bombshell", as one analyst termed it, played into concerns on Wall Street that Facebook's model could be under threat after a year that has been dominated by efforts to head off concerns over privacy and its role in global news flow.
Shares fell as much as 19.6 percent to $174.78, a decline that if sustained would wipe about $124 billion off the company's value - or nearly four times the entire market capitalisation of Twitter Inc
Dismal revenue, which initially pulled the stock down nearly 9 percent on Wednesday, clearly was not the end for wounded investors.
"Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis," Wehner told the results conference call with analysts.
Facebook's margin fell to 44 percent in the second quarter from 47 percent a year ago as it spent heavily on security and initiatives to convince users the company was protecting their privacy.
The company also said that revenue growth from emerging markets and the company's Instagram app, which has been less affected by privacy concerns, would not be enough to repair the damage.
The impact on the rest of the FAANG group of high-flying tech stocks was marginal.
Shares in Alphabet
Of 47 analysts covering Facebook, 43 still rate the stock as "buy", two rate it "hold" and only two rate it "sell". Their median target price is $219.30.
MoffettNathanson analysts called the company's forecast "either the new economic reality of their business model or a very public act of self-immolation to stave off further regulatory pressure".
The $15.8 billion in net worth that Zuckerberg stands to lose in the move is equal to the wealth of the world's 81st-richest person, currently Japanese businessman Takemitsu Takizaki, according to Forbes real time data.
Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, in recent years has trimmed, but not eliminated, the amount of Facebook shares in his clients’ accounts, and he said he sees the company as a three-year investment.
"We own it for its leadership in the tech industry," he said. "It’s the F in FAANG, but what's to say that, 10 years from now, Facebook isn't the next Myspace and something else has taken its place?"
(Click here https://tmsnrt.rs/2JV9APu for a graphic on Facebook's slowing revenue growth)
(Reporting by Vibhuti Sharma, Munsif Vengattil and Devbrat Saha in Bengaluru and Noel Randewich in San Francisco; Editing by Robin Paxton and Patrick Graham)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
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