Facebook’s $100 billion-plus rout is the biggest loss in stock market history

Facebook’s $100 billion-plus rout is the biggest loss in stock market history, by Fred Imbert.

Facebook on Thursday posted the largest one-day loss in market value by any company in U.S. stock market history after releasing a disastrous quarterly report.

The social media giant’s market capitalization plummeted by $119 billion to $510 billion as its stock price plummeted by 19 percent. At Wednesday’s close, Facebook’s market cap had totaled nearly $630 billion, according to FactSet. …

Facebook’s enormous loss in value came a day after the company reported weaker-than-expected revenue for the second quarter as well as disappointing global daily active users, a key metric for Facebook. The company also said it expects its revenue growth rate to slow in the second half of this year.

Several analysts downgraded Facebook’s stock, including Nomura Instinet’s Mark Kelley. “With stagnating core user growth, we think there is too much near- to mid-term uncertainty to recommend shares at this point,” Kelley, who downgraded the stock to neutral from buy, said in a note.

While some non-PC writers are cock-a-hoop for political reasons that Facebook tumbled, Facebook’s fall is not directly, or maybe not at all, because of its political antics. The stock plunged because of the changed data on Facebook’s growth rate. Instead of rapidly gaining users, it is now stagnant or even declining slightly. Thus, advertising revenue projections change from buoyant to static.

One can argue that the fall in growth rates of users is because of its political bias driving away users. Maybe. But it could also simply be because there are only so many people who are potential customers — a finite market saturates eventually.