Facebook just had an infamously bad day on Wall Street.
The social network closed down 19 percent on the day, shaving $120 billion off its market cap in the process — making it the biggest single-day hit in stock market history.
The nosedive replaces Intel’s $91 billion drop back in 2000 as the worst single-day performance in Wall Street history.
Facebook is now worth about $504 billion, after its underwhelming second quarter earnings sent investors running for the hills.
The drop was especially painful for co-founder and CEO Mark Zuckerberg, the company’s biggest shareholder. Zuckerberg had upwards of $15 billion erased from his net worth on Thursday — on paper, at least.
Facebook has been updating its platform to better safeguard users in the wake of the Cambridge Analytica data leak, when up to 87 million users had their profiles unwittingly accessed by the political firm. Executives, including Zuckerberg and COO Sheryl Sandberg, have made the rounds in recent months, telling reporters and Congress how the company plans to improve.
But the leak has largely been a non-issue for Wall Street — Facebook closed at an all-time high of $218 per share before its second quarter earnings were announced on Wednesday. The issue for Wall Street turned out to be money and users.
Facebook missed its revenue marks for the first time in 13 quarters, despite setting a company record with more than $13 billion in sales. Compounding matters, CFO David Wehner told investors on the company’s earnings call to not expect the same rapid sales growth in the quarters ahead. During the second half of 2018, Wehner said, “We expect our revenue growth rates to decline by high single digit percentages from prior quarters sequentially.” That comment was anathema to investors.
Another issue for Facebook is user growth. The social network crawled to 1.47 billion daily active users in Q2, an increase of just 1.4 percent over Q1. That’s the company’s slowest quarter-over-quarter growth ever. Further, daily users in the U.S. remained static at 185 million people, while use actually declined in Europe, in part due to the implementation of new EU privacy laws.
The cardinal sin of lagging user growth, coupled with underwhelming revenue growth projections, led to Facebook’s historically dreadful day.