Mark Zuckerberg loses a fortune as Facebook outlook, stock take a dive

NEWYORK: THE $16.4 BN THAT ZUCKERBERG STANDS TO LOSE IS MORE THAN THE NET WORTH OF THE WORLD’S 80TH RICHEST PERSON

Facebook Inc chief Mark Zuckerberg’s fortune is set to take a $16 billion hit on Thursday, as the social media giant braces for the biggest one-day wipeout in US stock market history, a day after its executives forecast years of lower profit margins.

At least 16 brokerages cut their price targets on Facebook after executives said the cost of improving privacy safeguards, as well as slowing usage in the biggest advertising markets, would hit the company’s profit margins for more than two years.

Facebook shares were down 20.4% at $173.20 in premarket trading, a decline that would wipe about $128 billion off the company’s value — or nearly four times the entire market capitalisation of Twitter.

Facebook’s second-quarter results were the first sign that a new European privacy law and a string of privacy scandals involving Cambridge Analytica and other app developers are hitting the company’s business.

Facebook also warned that the toll would not be offset by revenue growth from emerging markets and the company’s Instagram app, which has been less affected by privacy concerns.

Describing the announcements as “bombshells”, Baird analysts said the issues were to a large degree “selfinflicted” as Facebook sacrifices its core app monetisation to drive usage.

Some analysts said Facebook’s issues would not be easily resolved.

“Unlike Netflix, whose quarterly shortfall we saw as temporary, here we see an evolution of the story, albeit a portion of which we expected,” said Daniel Salmon, analyst at BMO Capital Markets.