Facebook enters freefall

San Francisco : Facebook shares went into a freefall Wednesday as a stunningly weak financial outlook raised fresh concerns for the social networking giant as it tries to recover from the impact of data protection scandals and investigations. After-hours trade saw Facebook shares plunge by some 21 pe rcent, wiping out an estimated $130 billion in market value if the slump is confirmed at Thursday’s market opening.

The second-quarter report sparked initial selling after it showed revenue and user growth came up short of expectations. Profit was up 31pc in the second quarter at $5.1 billion; revenues rose 42pc to $13.2 billion, slightly below most forecasts. Selling pressure accelerated when chief financial officer David Wehner warned in a call with analysts of a weaker outlook in the coming quarter.

Wehner said revenue growth “decelerated” in the second quarter and will decline “by high single digit percentages” and added that “we are also giving people who use our services more choices around data privacy which may have an impact on our revenue growth.” On the call, Jefferies & Co. analyst Brent Thill said that “many investors are having a hard time reconciling that deceleration... It just seems like the magnitude is beyond anything we’ve seen.”