Facebook Takes Massive Hit, Zuckerberg Loses $660 Million
After taking a hard hit on Wall Street last week, Facebook’s stock sank even lower Monday.
The company’s stock price dropped almost 4 percent in early trading, Fortune reported.
By the end of the day, the stock had rebounded slightly to a 2.2 percent drop.
Facebook’s recent tumbles have cost CEO Mark Zuckerberg billions. The company’s founder owns 14.18 million Class A shares and 441.6 million Class B shares. The Bloomberg Billionaires Index estimates Zuckerberg’s net worth has dropped another $660 million from the most recent hit.
Facebook’s fall is also bad news for the markets as a whole. The fact that Facebook has lost more than 20 percent of its value since July 25 helped push the NASDAQ to its lowest level since July 5.
That puts Facebook into what’s called bear market territory, MarketWatch reported, noting that a bear market is one that loses 20 percent of its former value.
Some commentators said Facebook’s decline proves the adage that what goes up eventually comes down.
“The guys at the top don’t stay there forever,” said Kim Forrest, senior equity analyst at Fort Pitt Capital, according to CNBC.
“I don’t see anyone displacing them right now, but they do have to make changes to their business models. For example, Facebook has to spend more money to make sure people aren’t abusing the platform. Investors like more money, not less,” he said.
CNBC’s Jim Cramer said the social media giant is no longer a growth stock, CNBC reported.
“You have a company that has expenses going up dramatically … (and) revenues are decelerating dramatically,” Cramer said. “That’s the prescription for a short sale.”
Cramer said the stock’s drop will rob the company’s leadership of some of its luster.
“When things are good, these people are champs,” Cramer said, referencing Facebook’s leaders. “When things were bad, they were completely helpless and out of their element.”
Facebook’s massive earnings drop prompted a lawsuit from shareholder James Kacouris, The Washington Post reported. The suit was filed Friday.
Kacouris claims that Zuckerberg and Facebook’s top financial officer, David Wehner, misled shareholders about the slowing growth of Facebook’s revenue.
“Facebook’s announcements shocked the marketplace,” Kacouris said.
The company’s “wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares,” have caused losses to shareholders, he said in the complaint.
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