Facebook CEO Mark Zuckerberg. Picture: JOSH EDELSON / AFP
Facebook CEO Mark Zuckerberg. Picture: JOSH EDELSON / AFP

 San Francisco — Founder and CEO Mark Zuckerberg’s fortune slid $4bn on Thursday as shares of Facebook dropped  more than 8%  after the social-media giant posted its slowest-ever quarterly sales growth.

The decline left Zuckerberg with an $81bn fortune with the shares trading at $210.41 apiece ahead of the close in New York. Despite the drop, Zuckerberg’s net worth is still up in 2020. His fortune had climbed $6.6bn through to the end of Wednesday.

Zuckerberg, 35, remains the world’s fifth-richest person, according to the Bloomberg Billionaires Index.

Shares of Menlo Park, California-based company  dropped as much as 8.3% on Thursday before paring the decline.

The company reported fourth-quarter revenue of $21.1bn on Wednesday, boosted by ads on Instagram and in video. The 25% increase from the period a year earlier was the slowest-ever quarterly sales growth for Facebook, though it topped analysts’ average estimate of $20.9bn. Shares fell about 7% on the news.

Facebook said it had 2.89-billion monthly active users of its products around the world, but growth stagnated in the US and Canada on the main social network — the primary source of advertising sales. Monthly active users hit 2.5-billion on the main network as of December 31, slightly topping analysts’ estimate of 2.49-billion.

Facebook has warned for several quarters that growing at the same rate will be more difficult in the future. The company’s trajectory is limited by the number of world internet users, most of whom already have an account on Facebook or its WhatsApp, Instagram and Messenger properties. That means finding future revenue streams will be increasingly difficult, requiring experimentation with avenues that might not pay off, such as in artificial intelligence, virtual reality and shopping.

What Facebook “has to grapple with is a rising cost framework while each incremental dollar of revenue growth gets tougher”, said James Cakmak, a partner at Clockwise Capital.

Expenses rose 34% to $12.2bn the period ended December 31, the company said.

The uncertainty comes as Facebook has fewer public cheerleaders. The company has been vilified by US presidential candidates while facing new global privacy laws and two federal antitrust probes. Zuckerberg has testified multiple times in Congress about his company’s stumbles.

Still, Facebook and Google dominated digital ad spending with an estimated 61% of the market in 2019, a slight increase from a year earlier, even as Amazon.com gained sales, researcher EMarketer said in November.

The company reported net income of $7.35bn, or $2.56 a share, compared with $6.88bn, or $2.38 a share, a year earlier. Analysts, on average, estimated $2.53 a share.

Also this week Facebook  agreed to pay $550m to resolve claims it collected user biometric data without consent in one of the largest consumer privacy settlements in US history.

The accord, which still requires a judge’s approval, will avert a trial that may have exposed the social networking company to billions of dollars in damages. Facebook fought unsuccessfully to persuade the US Supreme Court to derail the class action case. The users alleged that the company’s photo-scanning technology violated an Illinois law by gathering and storing biometric data without their permission.

“We decided to pursue a settlement as it was in the best interest of our community and our shareholders to move past this matter,” Facebook said.

While Facebook has weathered controversy over privacy almost since its inception, the company has come under particularly harsh scrutiny in recent years, both in the US and in Europe.

Facebook reached a historic $5bn deal in July with the US Federal Trade Commission to settle an investigation into its privacy policy  stemming from the Cambridge Analytica scandal that came to light in early 2018. The company is also facing probes by New York, California, Massachusetts and others over its third-party data collection. 

Bloomberg 

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