Facebook founder, Mark Zuckerberg had to face a $123 billion loss, one that dropped his position from the third richest billionaire to the sixth in the Bloomberg ranking. The one-day wipe out of individual wealth has set a new record, and that too overnight!
The drop in capital blew breezes on the young billionaire himself and also his co-founders, Dustin Moskovitz and Eduardo Saverin, who lost $3.9 billion and $2.2 billion, respectively, while Chief Operating Officer, Sheryl Sandberg lost $100 million. Other big investors too were a part of this hit, where market value was struck by a $119 billion loss, the most ever in a day for a U.S. company.
— Bloomberg Markets (@markets) July 26, 2018
When Facebook’s second quarter earning report came out as an under performance than what was expected, the investors did not deem their factored shares in the company to be of worth. Even though the revenue statistics were up, the user growth was down. Zuckerberg, Sheryl Sandberg, and Facebook CFO, David Wehner attempted to tether the investors by bringing the increasing utilization of the company’s other apps, such as Whatsapp, Instagram etc, to a higher pedestal. A total of 2.5 billion people indeed use at least one of the company’s app monthly, but the investors’ inclination towards the earning report still deemed heavier, unfortunately. Months of scandals and criticism regarding data privacy issues, added more fuel to this fire as user growth had already been slightly stunted, and before the world, or even Mark himself, knew the stocks had dropped by 24% due to fund withdrawals.
The data privacy scandal concerning the political consulting firm Cambridge Analytica and misinformation on Whatsapp, contributed to mob killings in India, which pilled onto the pressure on Facebook to re-evaluate how its services maintain security and decorum. Mark Zuckerberg prompted several apologies to the Cambridge Analytica issue, whilst the firm generated calls for users to desert Facebook. The public company had been growing steeply ever since its launch in 2012, until recently, when its revenue started growing at its slowest rate in almost three years. Commenting on the decline in revenue growth, Wehner stated;
We plan to grow and promote certain engaging experiences like Stories that currently have lower levels of monetization, and we are also giving people who use our services more choices around data privacy which may have an impact on our revenue growth,
Not only did Mr. Zuckerberg lost in about an hour, what is 1.7 times as much money as President Trump claims to have made in his entire lifetime, but also an the entire market values of Molson Coors Brewing Co., or Nasdaq Inc. and Ralph Lauren Corp; not to forget the total nominal GDP of the entire country of Jamaica, and wealth more than the value of all bitcoin in existence!
Perspective: Facebook lost the entire market cap of BTC , 47% of the entire Crypto market cap overnight…
— Ran NeuNer (@cryptomanran) July 26, 2018
The wealth hit of Facebook was followed by a slide in Bitcoin prices, once again below the $8,000 level. Disposal and consolidation dragged Bitcoin prices down from recent highs above $8,400 to below $7,840 on Friday, 27th July.
"It's so volatile – why would you want to invest in something that can just drop 20% in a day? Why would you put your money anywhere that is that risky? It sounds like a massive scam, a giant ponzi scheme, and the bubble is clearly bursting." – me, on the topic of Facebook stock
— Riccardo Spagni (@fluffypony) July 26, 2018
However, the downward inclination is still within the circles of correction, and it is expected to return to its usual rising trend shortly. As the news continues to spread like wildfire,the price crash is inviting comparisons to the behavior of crypto assets by millennials.
Some reacted to the Facebook loss, given that it matched the entire market value of Bitcoin. Bitcoin’s market value has slid to $135 billion,which is still a significant amount, matching several large companies. Nevertheless, Bitcoin trading happens on a very low “free float” of coins compared to stock market trading, and the price may be swayed more easily.
Because digital currency is preferred over traditional assets, it is seen as a tool for wealth transfer by large proponents of Bitcoin. Perhaps the only connection between the two assets is mere increase in fluidity of cash that has escalated the assets themselves.
tbh, bitcoin feels like a stable asset compared to Facebook pic.twitter.com/tude06ShTO
— Romain Dillet ? (@romaindillet) July 25, 2018
Bitcoin also still expects the inflow of institutional money, especially through the ETF as put forward by CBOE. In the latest attempt to pass their own Bitcoin ETF, the Winklevoss brothers, founders of the Gemini exchange, received another refusal.
On the other hand, the colossal drop Facebook slid upon is apprehended as a positive sign, elucidating the impression that the cryptocurrency market is indeed quite small.
Presumably, the crypto market holds plenty allure and potential to expand its premises, implied that the option for investments is perceived upon legitimacy, on par with the stock market.