Zuckerberg loses more than $15 billion in record Facebook fall
By Vibhuti Sharma and Munsif Vengattil (Reuters) - Facebook Inc Chief Executive Mark Zuckerberg's fortune took a more than $15 billion hit on Thursday, as the social media company suffered the biggest one-day wipeout in U.S. stock market history a day after executives forecast years of lower profit margins. 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
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 dominated by efforts to head off concerns over privacy and its role in global news flow.
Shares closed down almost 19 percent at $176.26, wiping more than $120 billion off the company's value or nearly four times the entire market capitalisation of Twitter Inc
Slowing revenue growth initially pulled the stock down nearly 9 in after-hours trading on Wednesday before losses picked up on the margin outlook.
"Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis," Wehner said on a 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 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".
Rahul Shah, chief executive officer at Ideal Asset Management in New York, a Facebook shareholder, said executives were trying to reset expectations about growth but the outlook caught Wall Street by surprise.
"A lot of value investors might jump in and support the stock at these levels ... it's probably a good buying opportunity for a long-term investor, but I wouldn't be jumping in with both feet today," he said.
The more than $15 billion in net worth that Zuckerberg lost on Thursday is roughly 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, Noel Randewich in San Francisco and Trevor Hunnicutt in New York; Editing by Robin Paxton and Patrick Graham)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut
By Tina Bellon and C Nivedita (Reuters) - Tesla Inc will further cut the price of its Model S "Long Range" sedan in the United States to $69,420, the electric carmaker's chief executive, Elon Musk, announced in a tweet https://bit.ly/2H0JCP0 on Wednesday. The anticipated drop marks the second time this week Tesla has cut the price for the high-end sedan, following a 4% cut of the Model S's price in the United States on Tuesday to $71,990.
By Jeff Mason DES MOINES, Iowa (Reuters) - Under siege over his handling of the novel coronavirus pandemic, President Donald Trump on Wednesday cited what he said was his son's mild bout of the virus as a reason why American schools should reopen as soon as possible. Trump made the comment about his son, Barron, as the president swept into Iowa on a mission to shore up support in battleground states that he won in 2016 but is in danger of losing to Democrat Joe Biden barely three weeks before the election. First lady Melania Trump announced in a statement earlier in the day that the virus that struck both her and her husband had also infected their 14-year-old son