Zuckerberg loses $16 bln in record Facebook fall (updated)

Keyence

26/07/2018 15:37

(Adds analyst's comment; Updates with share price after markets
open)
    By Vibhuti Sharma and Munsif Vengattil
    July 26 (Reuters) - Facebook Inc  FB.O  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.
    At least 16 brokerages cut their price targets on Facebook
after managers 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 as much as 19.6 percent at $174.78
in early trading, a decline that would wipe about $124 billion
off the company's value - or nearly four times the entire market
capitalization of Twitter Inc  TWTR.N .
    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 "self-inflicted" as
Facebook sacrifices its core app monetization to drive usage.
    Of 47 analysts covering Facebook, 43 rate the stock as
"buy", two rate it "hold" and 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.
    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.
    Others, however, saw a silver lining in Facebook's emphasis
on more engaging content and its promotion of stories on its
News Feed, which would support revenue over the longer term.
    "Bears win this quarter ... but not the war," said Brent
Thill, an analyst with Jefferies.
 (Click here https://tmsnrt.rs/2JV9APu for a graphic on
Facebook's slowing revenue growth)

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Facebook's slowing revenue growth interactive    https://tmsnrt.rs/2JV9APu
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 (Reporting by Vibhuti Sharma, Munsif Vengattil and Devbrat Saha
in Bengaluru; Editing by Robin Paxton)
 ((vibhuti.sharma@thomsonreuters.com; within U.S.
+1-646-223-8780; outside U.S. +91 702 213 2017; Reuters
Messaging: vibhuti.sharma.thomsonreuters@reuters.net; Twitter-
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