Facebook shares dive on weak outlook, weighing on Nasdaq

Facebook shares dive on weak outlook, weighing on Nasdaq

Facebook file photo
This file photo taken on Mar 21, 2018, shows the entrance to Facebook's corporate headquarters location in Menlo Park, California. Facebook shares dived nearly 20 per cent early on Jul 26, 2018, after it signaled it expects weaker growth, pushing the Nasdaq decisively lower. (Photo: AFP/Josh Edelson)  

NEW YORK: Facebook shares dived nearly 20 per cent early Thursday (Jul 26) after it signaled it expects weaker growth, pushing the Nasdaq decisively lower.

Merely half an hour after markets opened, Facebook had nosedived 18.8 per cent to US$176.56, wiping out nearly US$120 billion from the social media giant's value.

The Dow Jones Industrial Average rose 0.6 per cent to 25,572.77, while the broad-based S&P 500 dipped 0.3 per cent to 2,838.03.

The Facebook results shifted the market's attention from Wednesday's pledge by President Donald Trump and European Commission chief Jean-Claude Juncker on trade that had boosted markets.

Investors fled Facebook after the social network reportedly sharply higher profit and revenue, but signaled it expects slower user growth, partly due to the effect of data privacy scandals.

Facebook chief executive Mark Zuckerberg also cautioned that profitability would be hit by additional spending to secure the network.

Other technology companies retreated, including Google parent Alphabet, Netflix and Amazon, which is scheduled to report results after the market closes Thursday.

Facebook was not the only company to fall after results. Ford sank 4.1 per cent and Mattel shed 4.4 per cent, while American Airlines climbed 3.7 per cent.

In other developments, computer chip company Qualcomm advanced 4.5 per cent as it dropped a US$43 billion bid to acquire Dutch rival NXP on Thursday after failing to win approval from antitrust authorities in China.

US shares of NXP fell 5.6 per cent.

Source: Agencies/hs

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