The shares of the social media giant, Facebook, fell sharply after the network issued a warning to the investors regarding the slow-moving rate of revenue growth and enhanced investment. In fact, the shares slipped by 19%, which had affected none less than $120 billion or £92 billion of the market value of the social media giant.
The slippage of FB has also dragged the Nasdaq share index with it, degrading the shares by 1%. The company has planned to spend none less than 50% or even more as it is approaching to mend the security breaches. In the endeavor, the contents and advertisements will be minutely scrutinized regarding the utilization of user data. This will lead to the restriction in the advertisement, negatively affecting the revenue growth.
Facebook, which is also the owner of WhatsApp and Instagram, stated that the profit may deplete to 30%, which is 44% in the present quarter. The technology stocks were also affected as a result of the earning concerns despite quarterly bloating revenues. However, Daniel Ives, the Chief Strategy Officer of GBH insights believes that the numerous factors which are affecting the growth of the revenue are distinctive to the company.
Owner of YouTube and Google, Alphabet, is also dependant on the digital advertising. However, it concluded the day with 0.75% lower. On the other hand, Spotify, the music streaming service firm, gained around 4.5%, which was more than the speculated growth.
An analyst from BTIG Research, Richard Greenfield, stated that the investors have overreacted, which was not required in the present scenario. He believes that FB has the potential to produce great returns for the advertisers and the investors have a great opportunity in the long term. The Q2 2018 conference of FB had cleared that the investors are scared of the future outcomes from the company.