Tuesday, 23 October, 2018

Facebook sued after stock plunge 'shocked' market

Facebook CEO and founder Mark Zuckerberg. Credit AFP Facebook CEO and founder Mark Zuckerberg. Credit AFP
Cristina Norman | 30 July, 2018, 21:32

According to the complainant, the marketplace was "shocked" when "the truth" began to emerge on Wednesday from the Menlo Park, California-based company. He said the 19 percent plunge in Facebook shares the next day stemmed from federal securities law violations by the defendants.

The loss is the biggest one-day wipeout of individual wealth ever recorded on the ranking, which started tracking the world's biggest fortunes in 2012.

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.

The plaintiff, James Kacouris, filed the lawsuit Friday seeking class action status and to recover damages. A Facebook spokeswoman declined to comment. Most of its large institutional investors aren't panicking.

The Cambridge Analytica scandal forced the company to be more conscious of its privacy policies and allow users more control over their data. Many of those lawsuits have been reportedly consolidated in the federal court in San Francisco.

Thursday's plunge also hit Mr Zuckerberg's bottom line.

This allowed Buffer to rank third among the world's billionaires, while Zuckerberg ends up in the sixth spot.

Shares of Apple, which is set to report quarterly results on Tuesday, fell 1.7 per cent. Shares of Microsoft and Alphabet, which had soared after both companies recently reported strong quarterly results, dropped 1.8 per cent and 2.5 per cent, respectively.

"Nobody knows where the top is, where that growth slows down", said Phil Bak, CEO of Exponential ETFs and a former managing director of the New York Stock Exchange who said he's been warning investors of a potential sell-off in large tech stocks. Shareholders suddenly turned tail after realizing that growth had been running out of the company's core money-making app. While the company will continue to offer companies advanced digital marketing functionality, even small drawbacks can become a reason to decelerate the extraordinary revenue growth rates. This was actually announced by the social media site's very own CFO David Wehner. That it is high time for him to change his role from chairing the board to a more independent figure. 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.

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