Facebook on pace for the biggest market cap wipeout in history

Reuters / Keith Bedford

• Facebook’s stock is taking a beating after a disappointing second-quarter earnings report that saw the company miss revenue expectations and warn of slowing growth ahead.
• Shares were trading TK% lower on Thursday, putting them on pace to wipe out $129 billion in market value, which would be the biggest single-day drop in stock market history.
• Follow Facebook’s stock price in real-time here.

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Facebook is on pace to make the wrong type of history.

The Mark Zuckerberg-led social media titan saw shares drop more than 20% on Thursday following a disastrous second-quarter earnings report after the market close on Wednesday.

Investors took issue with sales and subscriber that fell short of expectations. But, perhaps most damaging of all, the company warned of a growth slowdown. What resulted was the biggest single-day drop since Facebook started trading publicly in May 2012.

But that still undersells the magnitude of Facebook’s earnings disaster. On a market capitalization basis, the company is on pace for a $133 billion loss, which would be the biggest in stock market history.

And as you can see in the chart below, it’s not particularly close.

CHART

It must be noted, however, that in order for a loss of this magnitude to be possible in the first place, a company must be gigantic. Facebook achieved its $630 billion valuation (now $497 billion) through an eye-popping TK% run up in its stock price since going public. That it’s seeing such a big chunk erased shows just how fickle investors can be about companies that already possess such stretched valuations.

Speaking of market-leading tech stocks, Facebook’s mega-cap counterparts Apple, Amazon, Netflix, and Alphabet all lost more than 1.5% at their overnight lows as the Nasdaq 100 index also dropped 1.4% in regular trading.

* Dragged the FANG group down

While analysts were stunned by Facebook’s growth guidance and subsequent stock plunge, Business Insider’s Jim Edwards points out that CEO Mark Zuckerberg warned three months ago that bad news was coming, and no one listened.

 

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