Is this it? The beginning of the end for Facebook, Inc. [NASDAQ:FB]?
It’s no secret that the social media giant has been under mounting pressure lately. A storm of fake news, foreign interference and data manipulation has been bubbling in the media.
But, while these dark clouds of discontent gathered, the company’s stock stood firm. That was until now.
Facebook’s market cap wiped off a staggering US$145 billion in afterhours trading. Dropping the share price of the stock by more than 20%.
It was a bloodbath.
Blood on the NASDAQ
The cause of the huge selloff was a dismal earnings report. As soon as the report hit the market the stock dropped 7%.
However, it wasn’t until the conference call that things got really messy. As sour news continued the stock continued to plummet.
34 million shares were traded in the afterhours beat down. Volumes that were way above the average trading levels of 17 million shares over the past month.
So, how bad is the news? Well, let’s just say it ain’t pretty.
For the first time in three years, Facebook missed its earnings estimates. We’re not just talking revenue either. User stats were also well below their forecast target.
The site’s biggest markets: US, Canada and Europe were all flat on traffic. Europe in particular saw three million daily users abandon ship.
In fact for the first time ever the company released a new stat. They noted that 2.5 billion people now use at least one of their family of apps each month. People that are either logging onto Facebook, WhatsApp, Instagram or Messenger.
That figure wasn’t doing them any favours though. In fact it reeked of desperation; a token stat that had no effect in easing investor fears.
It took them a while, but investors are finally spooked.
They took all those media shots in their stride at first, but not now. Now the cold hard facts have hit home like a ton of bricks.
We’ve no doubt the EU’s $5 billion dollar fine of Google is weighing heavily on people’s minds right now as well.
Obviously it doesn’t directly tie into Facebook’s own problems. But, it’s the fact that regulators are starting to turn on these big tech companies that could have people worried.
All-in-all it’s a massive bloodbath Facebook. The real toll though will only be revealed when markets open tomorrow.
Where to next for Facebook Share Price?
What happens from here is anyone’s guess.
We could wake up tomorrow and Facebook could be hitting new highs once again. Or the selloff could continue. We simply don’t know.
Honestly though the damage has already been done. The chink in the armour has been revealed. Facebook is no longer an impenetrable stock.
This selloff proves that investors are nervous. The market is worried.
Whether this is the beginning of the end…well that’s probably going a bit overboard. At the very least, though, this is a major scare.
Whatever happens next, Facebook can’t afford to make another blunder. Otherwise it could be their last.
For Money Morning