Mark Zuckerberg loses $16bn in record Facebook stock fall
Facebook 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 US 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 that has been dominated by efforts to head off concerns over privacy and its role in global news flow.
Shares fell as much as 19.6 percent to $174.78, a decline that if sustained would wipe about $124 billion off the company's value - or nearly four times the entire market capitalisation of Twitter.
Dismal revenue, which initially pulled the stock down nearly 9 percent on Thursday, clearly was not the end for wounded investors.
"Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis," Wehner told the results conference call with analysts.
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 that 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.