Facebook’s Lost Of $123 billion And The Reasons Behind It


While Pakistan and our site were busy in General Election 2018, major drastic happenings happened for the world’s largest social media platform, Facebook. The Facebook app often finds itself in controversies and mishappenings but this time, the lost isn’t in the form of defamation but it’s more or less severe than that.

On July 26, Facebook shared an alarming and scary warning of its user growth rate, that was becoming slowest-than-ever! And this, on the other hand, would rapidly decelerate the revenue growth of the social media platform.

Facebook Lost Roughly $123 billion In Just An Hour:

The giants of social media, like Twitter, Facebook and so on, published their second-quarter earnings on Wednesday. Apart from other’s achievements and lost, Facebook managed to stand out amongst all like it always does, but this time in a ‘not-so-applauding’ way.

The tech-giant made to the latest technology news by sharing its Q2 earning 2018. The company’s share price fell more than 20 percent and made the company lose more value than most startups and even public companies are ever worth, and that too in just two hours.

After sharing its brutal earning of Q2 2018, Facebook’s share price closed today at $217.50 — a record high — but fell to around $172 after the earnings call. This brought the company to the biggest market drop, since its functioning, a drop of roughly $123 billion.

Factors Behind Facebook’s Lost:

The social media giant, like I said above, brings itself to the latest headlines new one way or another. Once upon a time, Facebook had only been in the light for its futuristic features and high-level trust relationship between the company and its customers. All of these factors not only earned fame for the company but boosted up its revenue like magic.

Unfortunately, 2017 and 2018 wasn’t as good as previous years for Facebook. This was mostly because of its own fault. All kinds of controversies and blames surrounded the social media site and its CEO Mark Zuckerberg. From Cambridge Analytica Debacle to promotion of fake news, Facebook was rightly blamed for all.

While the CEO was often seen in accepting the mistakes of its company, the controversies couldn’t stop pouring in for Mark.

Facebook witness a major fall in its value after the whole fiasco of Cambridge Analytica in March 2018, but soon the company’s value saw 43% rise a little time later. This gave the company and analyst a thought that the whole debacle didn’t have a drastic effect on investors trust on the company. But like they say, “the company spoke too soon”. The Q2 earning of Facebook proved that the investors trust in the company was affected major ally, and it was clearly witnessed by the huge loss in the company’s earnings.

Another factor that played a major role in decelerating revenue of the company is slowest-ever user growth. The monthly user count of the company grew just 1.54, compared to 3.14 last quarter. And oh not to forget, the daily active users grew even slower at 1.44 percent, compared to 3.42 percent last quarter.

The company knew this was going to happen eventually, so they tried a lot of experiments in order to gain more users’ attention this year. But the company’s audience, mostly millennials found Instagram and Snapchat, a better option.

The user count almost shrank in Europe, flat in Canada and United States :

Facebook mobile app and browser saw its first-ever decline in monthly user count in Europe, from 377 million to 376 million. It got stuck at 241 million in the U.S. and Canada after similarly pausing at 239 million in Q4 2017.

These are the areas where Facebook gets 70% of its ad revenue from. The United States and Europe are the markets where Facebook charges the highest amounts for ads. But this time, the company saw its monthly average users decline in Europe from 377 million to 366 million users. In the United States, the user figure didn’t grow at all, staying at 241 million.

What will Facebook do next?

While the company’s agreeing on the fact that recovering for such damage isn’t a task of few days, Facebook is also busy in updating and upgrading its privacy policies. We all know that the credit behind the lost value of Facebook goes to its super-weak privacy policies that lead to vast breaching of trust! Now that the company is recovering from the loss, it’s also making its privacy and well-being stronger than before.

We hope that the social media giant learns not to compromise on its users’ trust and privacy, no matter what.

By Maira Feroz

A journalism student who's studying the native form of journalism but is performing it in the digital way.