Facebook Inc Chief Executive Mark Zuckerberg’s fortune took a more than $15 billion hit on Thursday (July 26), as the social media company suffered 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 Chief Financial Officer David Wehner startled an otherwise routine call with analysts by saying the company faced a multi-year squeeze on its business margins.
That “bombshell,” as one analyst termed it, played into concerns on Wall Street that Facebook’s model could be under threat after a year dominated by efforts to head off concerns over privacy and its role in global news flow.
Shares closed down almost 19 percent at $176.26, wiping more than $120 billion off the company’s value or nearly four times the entire market capitalization of Twitter Inc .
Slowing revenue growth initially pulled the stock down nearly 9 in after-hours trading on Wednesday before losses picked up on the margin outlook.
Facebook’s margin fell to 44 percent in the second quarter from 47 percent a year ago as it spent heavily on security and initiatives to convince users the company was protecting their privacy.
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 repair the damage.
Of 47 analysts covering Facebook, 43 still rate the stock as “buy”, two rate it “hold” and only two rate it “sell”. Their median target price is $219.30.
The more than $15 billion in net worth that Zuckerberg lost on Thursday is roughly equal to the wealth of the world’s 81st-richest person, currently Japanese businessman Takemitsu Takizaki, according to Forbes real-time data.