Facbook missed analysts’ projections for revenue and number of users in the second quarter, causing its stock price to fall by 20%.
Venkat Ramasamy the chief operating officer of FileCloud, a data security company that allows users to access files across multiple platforms, said, “It turns out there is indeed a direct correlation between data privacy scandals and daily active users on Facebook.” Ramasamy doesn’t think the free fall will last long though adding, “The stock has had an epic run since March, so short-term-minded investors were ripe to sell off Facebook once a hint of a less than perfect quarter turned into a reality. Less time on Facebook means slower top-line revenue that had driven the stock to recurring all-time highs.”
Facebook was trading at $173.50 at the close of the business day Wednesday 7/25/18 and if those losses hold into Thursday’s regular session, Facebook would lose more than $100 billion in market capitalization and lose the stock’s gains for the year thus far.
Data privacy fears in the US and Europe have hit the company hard. Mark Zuckerburg Facebook’s CEO commented on the fears during a conference call saying, “I wish I could snap my fingers and in three to six months solve all these issues,” referring to, among other things, the problems with Cambridge Analytica mishandling data from up to 87 million members and Russian interference in U.S. elections via the platform. “I think the reality is complex. I think this is a multiyear effort.”