Today's stock crash in Facebook shares was one of the worst shellackings we have seen in the technology sector all year. The company warned investors on their earnings conference call that growth is slowing and they even missed Wall Street's expectations for daily active users. Facebook saw a decline in usage in Europe and growth is flatlining here in the United States. This added up to an 18.96% decline in one day for Facebook shareholders.
Facebook's stock (FB) is the first stock in history to shed over $100 billion in market capitalization in one day. This is not a superlative that any company wants to hold, and CNBC put the drop into context.
Image Source: FactSet
Facebook's massive stock crash today puts it ahead of Intel's crash back in the year 2000. Intel shed over $90 billion in market cap on that day. The company's weak revenue guidance for the back half of the year has investors fleeing the stock and it doesn't appear that there is any reason to take a chance buying it here. Facebook is currently rated Hold at Game Trader, but I will be taking a closer look at a potential downgrade in the near future.
Today's news comes a week after Facebook CEO Mark Zuckerberg defended the rights of Holocaust deniers on his platform. Time will tell if this was the all-time high for the social media company's stock. Facebook is still wildly profitable, and this kind of reset of expectations may be what was needed for the company to inch higher in market cap in the long run. Facebook is still valued at over $500 billion, so the market isn't pricing in a death spiral just yet.
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