Facebook stock continues fall after record setting loss

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Thursday, July 26, 2018

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On Monday, social media giant Facebook‘s stock continued to fall for a third business day after last Thursday’s record-setting single-day selloff resulting in a US$120 billion loss of capital. At Monday’s closing bell, Facebook Class A Common Shares went from US$217.50 before the mass selloff to US$171.60.

File footage, from April: Facebook CEO Mark Zuckerberg testifying in front of the United States Congress.
Image: C-SPAN.

Speculation on lower-than-expected 2nd quarter earnings, slowing in active user accounts, new European privacy laws being enforced, and further investigations into Russian media influences were all being noted by analysts who have downgraded the stock. In all, analysts have changed 28 strong buy ratings to lower level buys, three hold ratings, and two sells.

Downgrading the stock has not affected analyst opinions on the long term prospects. Facebook stock has sustained recent major selloffs when an early 2nd quarter report discussed the degree of Russian infiltration into the social community and when co-founder Mark Zuckerberg testified to the United States Congress after the failure to protect user information discovered during a federal investigation into Cambridge Analytica. Facebook was able to rebound after both selloffs.

Twitter also sustained a major stock hit Thursday. However, the overall sector remains strong according to ratings services like Morningstar. To make up for Thursday’s selloff, Facebook must earn trust with current or prospective users and outperform a competitive business sector, all looking to attract disenfranchised Facebook users. As Facebook recovers, the market sector contains strong competition from Twitter and Instagram.


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