Facebook Stock Suffers Largest One-Day Drop In History, Shedding $119 Billion

Facebook is experiencing one its worst days as a publicly traded company. According to CNBC, Facebook lost about $119 billion of its value on Thursday, marking the biggest one-day loss in U.S. market history. From the report: The company's shares plunged $41.24, or almost 19 percent, to $176.26 a day after the social media giant reported disappointing results. The slide is the largest decline in market capitalization in history, exceeding Intel's $91 billion single-day loss in September 2000, according to Bloomberg data. Founder and CEO Mark Zuckerberg saw his fortune drop by $15.9 billion to roughly $71 billion. His personal loss alone, if only on paper, exceeds the value of companies such as Molson Coors and Macy's, which have market values of $14 billion and $12 billion, respectively. Investors were spooked by Facebook's forecast showing that its number of active users is growing less quickly than expected, while the company also took a hit from Europe's new privacy laws.

Comments

Retirement

[110010001000]

This is a bummer. My entire portfolio is Facebook, Netflix and Tesla. Let me go check to see how they are doing...

Re:Retirement

[Anonymous Coward]

There is no such thing as a free lunch. Money for nothing is always evil at its core, that is just fact.

Re: Retirement

[phantomfive]

Is there any reason to believe the Q2 report will be good? Facebook's report wasn't bad, for example. There may be a strong headwind against Nasdaq right now.

Re:Retirement

[110010001000]

If by "served nicely" you mean given you nothing in return (no cash) and a 20% on paper loss over the last 12 months then I have a bunch of stocks to "serve you quite nicely". :)

Re: Retirement

[110010001000]

These tech stocks are priced with massive growth baked in. No one cares about profit or debt, just growth, in tech stocks. Eventually you run out of people that sign up your website, or are willing or able to buy a $50,000+ electric vehicle and your growth ends. By that time, the insiders have cashed out enough of their positions to get rich, but the individual suckers get screwed over. Tesla has a way to go, but likely 2019 will be the end of Tesla. The Q2 report will be "good", though.

Re: Retirement

[Rei]

It's not about whether it's a good report or a bad report. It's about whether it's a better or worse report than people are expecting. And how well the spin of bulls and bears is taken, because trust me, both will have their own radically different interpretations of the same thing.

I can however tell you that people are expecting a bad report. Particularly since they held back over 10k vehicles to avoid tolling the tax credit limit in Q2, so that's a lot of production that they hadn't gotten paid for yet in Q2. Also, the layoffs, which were basically an SG&A cut, will be a benefit in Q3, but they're a severance hit in Q2.

Basically, if Q2 isn't terrible, it's great. And if Q3 isn't great, it's terrible. Tesla is targeting its first sustained profit in Q3. I think they'll need to show it for at least two quarters (Q3 and Q4) in order to get major sustained stock movement, however - because I know the bears are already writing their "It was a one-time thing!" articles for Q3. On the other hand, the Q2 report might be enough to finally stomp out the silly "bankwutpcy" meme.

Re:Retirement

[Rei]

I didn't buy 12 months ago. I bought mostly this spring, at $263. I've had a number of small purchases since then - most significantly positive, a few about the same, and only one meaningfully negative.

I assume you've got your short positions in, in advance of the Q2 report?

Re: Retirement

[Rei]

Note that if you can't even follow news properly, you probably shouldn't be messing with investment. The "refund" discussion wasn't with parts suppliers, it was concerning ongoing unfinished capex projects. Capex != parts. And it went out to fewer than 10 companies.

It appears that someone at one of the companies that got the letter thought that it was going out to all of Tesla's thousands of suppliers and thus wouldn't get in trouble for leaking it; the fact that this incorrect was already discovered in the first article on the topic of the letter, even before Tesla responded. It's a pretty safe bet that, given how few letters Tesla sent out, that they already know who leaked the letter, and I imagine that they won't be receiving any future contracts.

Re: Retirement

[110010001000]

Thats pretty amazing that Tesla has thousands of suppliers. But I am sure that being $10 billion in debt, firing 9% of your employees and asking for retroactive refunds is OK. Nothing to worry about. Because it is a growth stock and growth will continue forever!

Re: Retirement

[Rei]

Total assets = $27.3B
Total liabilities = $21,6B

Secondly, get your story straight: is Tesla's SG&A too high and they should be cutting back on it, or is cutting back on SG&A spending a sign of doom? You need to pick one story and stick with it.

Third, there is nothing unusual about automakers asking for refunds on ongoing contracts. Unfair? Sure, but welcome to the automotive industry. When you have the bully pulpit, you can get away with things like that.

Lastly, nobody said "forever". But given that they're simultaneously attacking multiple markets each worth hundreds of billions to trillions of dollars, yes, they're only just getting started. Nobody is anywhere close to the rate of EV production scaleup they've achieved this year and are on track to continue in the next coming years. 2-3 years from now that situation may change, given what some established automakers are finally starting to invest in EVs. But until then, Tesla stands alone. It doesn't matter if you're GM, VW, or anyone else - you can't magick Gigafactories into existence overnight.

Re:Retirement

[Rei]

"Irrational" is looking at past sales rates on a company that's actively undergoing an exponential growth curve, and continues to invest in said curve, and has reservations to buy all of its products (not even just "all of its cars" - all of its products period) years in advance. And yes, that even still applies to the Model 3 - they're milking all of the LR RWD, AWD and P from the US and Canadian markets they can, but that's still just a quarter of their reservations. Eurospec doesn't even start sales until next year. BTW; in case you missed it: wait times went up on new Model 3s orders the other day.

You would have also called Amazon investors "irrational" because they were doing the exact same thing.

Re: Retirement

[phantomfive]

I would have thought so too, but look how much apple stock has grown in market cap in the past five years. The kind of money that has to flow in for that to happen is ridiculous. So it seems there's no impractical top to what a stock can do.

Re: Retirement

[phantomfive]

It's not about whether it's a good report or a bad report. It's about whether it's a better or worse report than people are expecting.

That's a point worth repeating.

Re:Retirement

[vossman77]

While all three stocks are over valued. At least Netflix and Tesla make things, (tv content and cars), Facebook just makes money by selling its users data and maintaining its walled garden.

Re: Retirement

[tehcyder]

It's not about whether it's a good report or a bad report. It's about whether it's a better or worse report than people are expecting.

That's a point worth repeating.

As I understand, the problem was that the CFO used the term "decelerate" to refer to Facebook's slowing growth, and this rang alarm bells, presumably among people who think that a decrease in the rate of increase of subscribers is somehow the same thing as an actual decrease in the number of subscribers.

Tech stocks seem generally to be based on the idea that you have to have a continuous upward curve on the rate of increase of sales/subscribers/profit/whatever. So if you double your income one year, then 'only' increase it by 60% the next year and 40% the year after, this is some sort of disaster.

Re: Retirement

[Joce640k]

Tump's Clean Coal produces CO2?

That's news.

Re:Retirement

[dcw3]

Consider that with all those billions lost, the stock fell only to where it was in May! BTW, were is everyone going to complain about it?...on FB, and other social media already owned by FB. FB is spending money on something they've taken a blackeye on...security, so as much as I dislike them, I see this as a positive move.

Re: Retirement

[dcw3]

With a declining PE, I'd disagree...
https://www.nasdaq.com/symbol/...

Re: Retirement

[pgmrdlm]

Everyone who is into Electric cars never seems to address several issues. 1). They rely on the grid for their power, which is supplied by carbon producing minerals. Coal/Natural Gas. I know, except for Nuclear. But when was the last time a Nuke plant was built. 2). The raw materials for producing these batteries has to be mined. Raping of the earth. What is the percentage of recycling with these batteries. 3). You want to reduce a carbon footprint. Find something that the poor can afford. You know, the people that have to buy used cars that they can barely keep on the road. Or what, do you expect the rest of us to subsidize them. 4). Charging stations. Yea, there is one on every corner. And if you charge your car at home. So much for renters. Or what, are you going to force landlords to put in charging stations. I am all for reducing carbon foot print. Electrical vehicles are not the way. A much better way would be to reduce privately owned cars, and have better mass transportation.

Re: Retirement

[Rei]

And their magicked-into-existence gigafactories to make these things in volume are where, exactly?

Production has significant time delays from when you start paying for it to when you start gaining benefits from it. Wanting to make a "competing product that is as good" doesn't make it just happen. Everyone has some sort of "EV" out there, but they're all in much smaller volumes, and generally loss leaders (aka "compliance cars"). As an example: you know the Jaguar I-Pace, getting all of that press as a "Tesla Killer" (what they call pretty much every Also-Ran)? Never mind that they just delayed it by 4 months and are doing the same thing Tesla did with the Model 3 (lead with the more expensive versions first). Jaguar total - all of its ICE models combined - amass to just 100k per year. And the I-Pace will just be a very small fraction of its total production. Meanwhile, the Bloomberg tracker for the Model 3 believes they'll be over 6k per week in a couple weeks (an annualized rate of over 313k per year). All EVs.

Several years from now, Tesla might actually have serious competition, now that some major automakers are finally starting to pump meaningful amounts of money into EVs. Assuming that they're smart enough to target where Tesla will be at that time, rather than where Tesla is today. Because Tesla isn't standing still either.

Re: Retirement

[lpp]

1) It is far easier to reduce emissions at a single point source like a power plant than it is to maintain low emissions at multiple point sources, particularly since the air quality reviews done on-site for a power plant are far more rigorous than the testing your cousin's muscle car got at "that mechanic shop outside town you can go to for.. you know... muscle car inspections".

1a) It becomes easier to make the case to switch that power plant to something cleaner when it's the last holdout in the pollution chain. But speaking of the pollution chain...

2) The raw materials for petroleum products *also* has to be pulled out of the earth. And I would be willing to bet a *lot* of electric car batteries are recycled, because the places old cars go to die have a vested interest in recuperating as much value as they can which would include returning said batteries for a refund of some kind.

3) The Motorola DynaTAC was the first commercially available mobile phone, sold in 1983 for an inflation adjusted $10,117 (1983 price, $3,995). You can get a cheap mobile today with no initial cost and $20/month. The Osborne 1 was the first commercially available laptop computer, sold in 1981 for an inflation adjusted $5,007 (1981 price, $1,800). You can get a Dell laptop starting at $799 (didn't even try to find a cheaper option, though I'm sure they exist). The point being that new tech is *always* expensive at first, is *always* sold to the more affluent first and only drops in price once the market gets bigger and production can be streamlined.

4) Charging stations, and the problems with charging in general, are probably the biggest issue right now, particularly for renters. And that may be partly a question of scale (after all, charging stations continue to be put up, so at a certain point I would expect we would reach a tipping point where, yes, you *can* travel cross country with a reasonable expectation of recharge stations all along your trip) and it also may be partly a question of technology (how do you get sufficient electric potential transferred into the vehicle in a short amount of time?). But given how things are right now, market growth is the only way to continue to stoke interest in answering these questions.

Re: Retirement

[Dragonslicer]

1). They rely on the grid for their power, which is supplied by carbon producing minerals. Coal/Natural Gas.

That is not at all universally true. Many parts of the world get a significant amount of electricity from solar, wind, hydroelectric, or geothermal, and the general movement is in that direction. Also, large power plants are more efficient and better able to contain waste products than large numbers of small engines.

Re: Retirement

[Dragonslicer]

The Osborne 1 was the first commercially available laptop computer, sold in 1981 for an inflation adjusted $5,007 (1981 price, $1,800). You can get a Dell laptop starting at $799 (didn't even try to find a cheaper option, though I'm sure they exist).

Just as an FYI, I bought a cheap Dell laptop for $300 a couple months ago.

Re:Retirement

[datavirtue]

Now investors are going to start scrutinizing the stock. I wonder if it will get worse from here?

Re: Retirement

[datavirtue]

Running umpteen data centers on 11 so people can post fake news that literally gets people killed. That is what they are doing for humanity. At least when it started out as a cat meme feed it was just innocent trite.

Re: Retirement

[datavirtue]

I love automobiles...especially gas powered ones. I own a 7000lb truck that is my daily driver. Autmobiles of any size are extremely inefficient. The bicycle is the most efficient transportation known to man. A pack of peanuts can fuel 10-20 miles of travel. Thankfully, there is a bicycle boom in America and other countries. Major cities are refactoring for pedestrian and bicycle traffic that promotes engaging, fun communities of people congregating in cities instead of a heaping pile of automobile traffic. The health benefits resemble a miracle.

Re: Retirement

[datavirtue]

There are safe nuclear and fission alternatives. We are not focused on them though...especially in today's political climate.

Re: Retirement

[datavirtue]

One could argue that moving to those power sources is hampered by bringing on the load required to power automobiles.

Re: Retirement

[datavirtue]

Corporations dump thousands of perfectly good laptops on the market every day. You can buy a refurbished laptop for $300 that is much higher quality and performance than a new one.

Re: Retirement

[datavirtue]

The company to watch is Ford. They supposedly have no EV market penetration, much less a viable product but they do have a steadily increasing portfolio of technology and a keen conservative eye for the market. They are concerned with charging convenience and are trying to come up with a solution before going full-hog.

Re: Retirement

[mlyle]

> and generally loss leaders (aka "compliance cars").

Don't you find that scary for TSLA? Tesla has great product, but a bunch of competitors willing to sell product below cost generally isn't good for your ability to sustain margins, especially if the gaps between products are going to narrow. (And gaps between innovative products and everything else *always* narrow).

THE END IS NIGH, Zuckerbook!

[Rick Schumann]

Better put your affairs in order, Zuckerbook, the TechReaper is coming for you. All the signs and portents are present!

Time to bail out of Zuckerbook, folks. Zuckerbook is Old and Busted, time to scamper off to the New Hotness, whatever that is.
Really, leaving now will do Zuckerbook a favor by making it's death swifter.

Re:THE END IS NIGH, Zuckerbook!

[datavirtue]

Mellenials rolls their eyes at facebook and old people love it. Totally dead.

Re:THE END IS NIGH, Zuckerbook!

[Rick Schumann]

Talks about 'old people'
MFW what he means is 'anyone over 25'

Oh noes, you might have to (shocking!!1!) have face-to-face conversations with people! How will you EVER recover?

119 billion, 16 billion

[Sooner Boomer]

Those numbers are greater than the GDP of nations. In 2017 the GDP of the U.S. was only about 20 billion.

https://www.statista.com/graph...

Re:119 billion, 16 billion

[110010001000]

That would be trillion. If the GDP of the US was only 20 billion we would be in big trouble. As it is, we are in big trouble, but not THAT bad.

Re:119 billion, 16 billion

[Fly Swatter]

Anyone that went to a competent school in modern times should know that number is way off. Read the chart's fine print. It's also a sign of how ridiculously mind numbing economics numbers have become. How do you mentally imagine 20 trillion of anything?

Re:119 billion, 16 billion

[duke_cheetah2003]

How do you mentally imagine 20 trillion of anything?

I just imagine 20 followed by an absurd number of zeros. Works for me.

Re:119 billion, 16 billion

[ShanghaiBill]

The market cap of Facebook fell from the GDP of Argentina to the GDP of Belgium, a difference of the GDP of Kuwait.

List of countries by GDP

This is actually an apples-to-oranges comparison, since market cap is a measure of assets while GDP is a measure of income.

Re:119 billion, 16 billion

[rastos1]

How do you mentally imagine 20 trillion of anything?

I imagine sand grains in Sahara.

Re:119 billion, 16 billion

[Daetrin]

Why is there no "-1 Wrong" moderation, especially when the citation provided explicitly disagrees with the statement in the post?

Sucks for investors..

[Anonymous Coward]

but has facebook made our lives better? If it vanished tomorrow would it matter? Like tobacco companies?

Re: Sucks for investors..

[Anonymous Coward]

I gave up FB a year and a half ago. It sucked for a week. After that I didnâ(TM)t even think about it. All social media is a huge time suck.

Simpson: Nelson: Ha-Ha!

[UnknownSoldier]

Oh look, imaginary value dropped. Sucks to be you.

When is the /. article for when Fuckerberg takes a shit?

--
Insecure children censor.
Adults communicate about taboo subjects, and laugh.

yay

[phantomfive]

Keep it up!

...normally this would be a buy opportunity...

[ole_timer]

but not now

Re: ...normally this would be a buy opportunity...

[phantomfive]

Why not? Do you hope Facebook will continue to shrink, as I do?

Re: ...normally this would be a buy opportunity...

[ole_timer]

know not hope...advertisers - the source of revenue for them - are running for the exits

Re:Shity Company

[Anonymous Coward]

Read Fuckerburg and a few insiders cashed out a few billon before the stock tumbled.
Maybe FB will go the route of pets.com, a few drops, a few bounces then worthless,
FB doen't actually appear to have real value, only what people think it's worth, they make nothing, not even a dog puppet to auction..

Re:Donâ(TM)t feel for the communist

[Tablizer]

Some libertarians don't really want capitalism in the sense of competition. If the big companies merged into one giant monopoly, they don't care, often believing other forces will eventually compensate or end the monopoly without gov't intervention. Lack of gov't meddling may be more important to them than sufficient competition because they believe the problems caused by gov't outweigh the value of their their fixes.

This has been another episode of...

[Anonymous Coward]

Go Woke! Go Broke!

Inverted

[The Evil Atheist]

Headline should be: "Facebook suffers over-inflated stock prices for X years."

Re:Inverted

[Anonymous Coward]

Hey Schmuckerberg, I'll take the whole shithouse off your hands for ONE PENNY. US currency, CASH. Final offer.

Re:Inverted

[Dragonslicer]

Headline should be: "Facebook suffers over-inflated stock prices for X years."

Where X = 1? Even after this 20% drop, the stock price is still higher than it was a year ago.

Re:The Stock Market is Fucking Stupid

[Narcocide]

Oh, you think they're stupid? If you haven't figured out by now that stock prices are entirely based on wishful thinking then I've got some bad news for you...

No such thing as a market cap

[goombah99]

For large companies the notion of a market cap is fiction. If one defines market cap as shares outstanding times market price this number has no bearing on the sale value of the shares. Any attempt to sell a trillion dollars of stock at once would force the price to fall in the process of selling it. At that level the last shares might not even find a buyer at any positive price. Thus the market cap would be massively greater than the realizable market trade.

Saying the market cap dropped by 119 billion is equally gibberish.

If you disagree then you need to also realize that no one ever paid the market cap for all the outstanding stock. Most of it was bought at Lower prices. The integrated area of price by share histogram is far less than the market cap.

Re: No such thing as a market cap

[phantomfive]

Well you are definitely wrong with your last point: when public companies get bought, the buyer usually pays MORE than the market cap. It is true that the stock wasn't all bought at the current price, but with a stock that is high volume like Apple, it still takes a huge infusion of cash to move the stock that much.

Re: No such thing as a market cap

[goombah99]

Right answer but wrong rationale for getting to the answer. Companies are never purchased for their stock market market cap. They are purchased because they company has some value, usually earnings capacity. A good rule of thumb is that the selling price of a value-oriented company (as opposed to a growth stock) is that about 10x it's earnings. that is the payback period (ignoring net present value) is about ten years. If the company has growth potential then the price should be higher. Thus to take an example, if the price to earnings ratio of a growing company is 16 then, it's also reasonable to pay at least 16 fold it's earnings.

As it turns out that means it's value to you happens to be roughly the market cap plus a premium because the company probably has synergy for you making it worth more to you than to anyone else.

And conveniently, paying more than the stock price is what is required to induce at least half the people to sell you their shares.

You might wonder why it turns out to be so convenient that the market cap happens to be the purchase value of the company. And the answer is, to people who invest based on fundamentals that is how they decide to invest. And consequently the price to earnings ratio of a company tends to track the market cap in just that way. 10 fold P/E for an established profitable company and higher multiples for companies with either higher profits or higher expected growth is pretty normal (well not lately, but over time).

So yes you got to the right answer. But the reason for it is not that stock value-- what people paid for that stokc initially-- is the market cap. When the price declines 119B did not get lost because it was never paid in the first place. And after the sale of a company, the value of that company should rise if it was a good investment so the new owners will also have paid less than the future market cap would be.

point is no one paid the market cap on a growing stock it's a fiction. (now on a failing company that's different).

Re: No such thing as a market cap

[phantomfive]

Next time just say, "Oh, I was wrong, market cap is not entirely fiction."

Re:No such thing as a market cap

[Hognoxious]

It's not as stupid as your punctuation.

Semicolon - the new comma!

It's not a big deal

[mysidia]

They've lost a little less than one year of stock price increases --- which also happened before last year. If you were in on Jun 1, 2017 then you still have a slight gain, and if you were in before that date you still have a huge gain.

This is just a 18% bump down, and chances are it will recover back up from bad news ---- such minor retracements happen all the time, and it's not too significant, as long as it doesn't continue dropping... time will tell.

Re:It's not a big deal

[CaffeinatedBacon]

18% is a minor retracement? 1 years increase dropped in one day is 'not too significant'?
I've got this bridge I'd be will to let you take off my hands for the right price.

Re:It's not a big deal

[CaffeinatedBacon]

willing

Re:It's not a big deal

[mysidia]

On on 10/2/2017, Facebook was at $172/Share, On 3/26/2018, Facebook was at $157.20/Sh, Today they're at $173/Share.

Yes.... so far this looks like a minor retracement; we'll see in a few weeks if they recover or if this may be the start of a new trend,
but we don't see that there's some super major event.

Re:It's not a big deal

[CaffeinatedBacon]

It's not like it was the biggest loss in stock market history or anything...except it was.

Re:It's not a big deal

[mysidia]

It was not the biggest loss in stock market history; that's just flagrantly incorrect. I would suggest you go do more research.

Re:It's not a big deal

[CaffeinatedBacon]

It was the biggest daily loss in stock market history
You could maybe argue it's only due to inflation. Intel's daily loss of $90 Billion in 2000 would be bigger in inflation adjusted terms for example.
But to argue it's only a "minor retracement" is just pants on head retarded.

GA.A

[AncalagonTotof]

One down. Next ?

Bitcoin

[geekymachoman]

For a second there .. .I thought it's Bitcoin news !

But then I checked the comments... and not one bitter genius said "but it's fake value - SO IT'S SHIT YOU STUPID PUTTING YOUR MONEY IN BTC HAHAHA IT'S NOT REAL!1".

Good. Thank you for letting me know this is real.

Re:Shity Company

[vipw]

Investments in positive cash flow will always make sense. Facebook has a P/E of 24, which can be thought of as a 5% yield were it to be returned to shareholders. And that's the yield with their current level of profit, but their profit has actually been growing for a long time, and it is forecast to continue growing. So why do you think FB doesn't have real value?

Re:Question

[MerlTurkin]

A site for attention whores and drama queens. You're welcome. P.S., I'm not on facebook. Fuck facebook.

It's just PAPER

[p51d007]

Unless you cash it in, you haven't "lost" anything. If you are a day trader or speculator, that's one thing, but Zuck hasn't "lost" anything unless he sells his shares.

Not surprised

[iampiti]

I feel like an old fart regarding the social networks (37, heh) but it seems kids don't really use Facebook these days. If a social network loses its luster with the young people they're in deep trouble. Anyway, it may be just my perception but it seems most of my friends (25-45 age range) are losing it less than before.

Re:Donâ(TM)t feel for the communist

[Feyshtey]

Some libertarians don't really want capitalism in the sense of competition. If the big companies merged into one giant monopoly, they don't care, often believing other forces will eventually compensate or end the monopoly without gov't intervention.

Regarding the bolded portion : Like competition enabled through true free markets? I'm not saying we have a truly free market. But that would be the ideal for real libertarians. But hell, we don't really have real libertarians anymore either so....

Re:Political bias?

[Feyshtey]

So if you don't conform to the appropriate language use as deemed required by left-leaning to very left political activists then censorship is justifiable but not political.
Got it.

Re:Political bias?

[Tablizer]

I'm not sure what you mean. How about an example.

Re:Shity Company

[datavirtue]

It is speculative unless they are turning 15% profit.

Re:Shity Company

[vipw]

That comment doesn't make any sense.

Why 15%? 15% of what? Revenue? Market capitalization? Book value?
And how can there possibly be a threshold that makes investment not be speculative?