Tuesday, 23 October, 2018

Facebook Facing Legal Issue After Stock Plunge

Zuckerberg loses $16 bn as Facebook shares plunge after profit warning Facebook could lose $151 billion in market capitalization today
Jan Cook | 30 July, 2018, 21:30

Shareholders often sue companies in the U.S. after unexpected stock price declines, especially if the loss of wealth is large. At that point, the stock was still recovering from an earlier battering over a major privacy scandal.

Currently, its stocks are at US$174.89 down 0.78 per cent.

According to Reuters, shareholder James Kacouris filed a complaint in the Manhattan federal court accusing both Zuckerberg, CFO David Wehner and Facebook of making "misleading statements about or failing to disclose slowing revenue growth, falling operating margins and decline in active users".

Company shares saw a massive drop in March in the wake of the Cambridge Analytica data breach scandal.

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 fix the damage.

More than 500 hikers stranded on mountain after Indonesia quake
More than 500 climbers including 21 from Malaysia are reportedly still stranded on the volcanic Mount Rinjani in East Lombok. About 820 trekkers, including 617 foreigners, were said to have been on Mount Rinjani during the natural disaster .

After a surprisingly weak growth forecast in this week's earnings report, Facebook's stock price dropped 19 percent. Furthermore, the growth in the number of daily average users is slowing down as well. "Stories", which are short videos posted on users' profiles for a short period of time can't be used as much for advertising as a news feed with a lot more space for additional information. And the increased spending aims, among other things, to prevent a replay of the fake news and propaganda that Russian agents unleashed on an unguarded Facebook in an attempt to sway the 2016 presidential election.

Zuckerberg reiterated in the earnings call last week that the company's major investments in security will lower its profitability.

There are several reasons for the declining revenue growth rate. They have seemed unstoppable, even in the face of regulatory pressure, user dissatisfaction and broader existential questions about their impact on society.

For more than a year already, Facebook and other social media companies have been under fire courtesy of policy makers and regulators.

"Mark Zuckerberg isn't panicking", he said.

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