Facebook is on pace to make the wrong type of history.
The Mark Zuckerberg -led social-media titan saw shares drop more than 19% on Thursday following a disastrous second-quarter earnings report. The damage was swift and unforgiving in the after-market on Wednesday as Facebook plummeted as much as 24% within an hour. The selling has now spilled over into regular trading.
Investors took issue with sales and subscriber numbers that fell short of expectations. But, perhaps most damaging of all, the company warned of a growth slowdown . Facebook is now headed for its biggest single-day drop since it started trading publicly in May 2012.
But that still undersells the magnitude of Facebook’s earnings disaster. On a market capitalization basis, the company is on pace for a $120 billion loss, which would be the biggest in stock-market history .
And as you can see in the chart below, it’s not particularly close.
It must be noted, however, that in order for a loss of this magnitude to be possible in the first place, a company must be gigantic. Facebook achieved its $630 billion valuation (now $515 billion) through an eye-popping 472% run up in its stock price since going public. That it’s seeing such a big chunk erased shows just how fickle investors can be about companies that already possess such stretched valuations.
Speaking of market-leading tech stocks, Facebook’s mega-cap counterparts Apple , Amazon , Netflix , and Alphabet all lost more than 1.5% at their overnight lows as the Nasdaq 100 index also dropped 1.2% in regular trading hours.
While analysts were stunned by Facebook’s growth guidance and subsequent stock plunge, Business Insider’s Jim Edwards points out that CEO Mark Zuckerberg warned three months ago that bad news was coming, and no one listened .