Facebook has lost over $100 B in market cap after the Cambridge Analytica exposé

The social networking giant had hit a peak valuation of $560 billion in early February. Revelations about the data breach affecting 50 million users has led to a free fall in Facebook stock.

It has been a horrendous fortnight for Facebook since the Cambridge Analytica data scandal broke out. The social networking giant took long to acknowledge the crisis, and even longer to take action.

The internet universe, meanwhile, was gripped by the #DeleteFacebook fever. The likes of Elon Musk, Brian Acton (WhatsApp co-founder), and Playboy magazine added fuel to the fire by deleting their respective Facebook pages.

Facebook has shed over 22 percent of its stock and lost over $100 billion in market cap since the Cambridge Analytica revelations. It has brought down all prominent tech stocks along with it.

Mark Zuckerberg, the fourth-richest person in the world, saw $6 billion washed off his wealth on a single day. Overall, he’s lost about $14 billion, and is valued at $61 billion now. 

Facebook’s valuation fell to $439 billion soon after the Federal Trade Commission (FTC) announced an investigation into the data breach. In February, Facebook had hit peak valuation of $560 billion, making it the fifth-most valuable company on the Dow Jones index. But the distress caused by the Cambridge Analytica revelations has led to panic selling by investors and shareholders.

A new forecast by Pivotal Research, which tracks media and internet companies, has lowered the Facebook price target to $138. This is lower than even its current trading price of $153. Until early February, Facebook was trading at $195. It was also the second-most widely held stock after Amazon, according to Goldman Sachs.

Analysts say there’s “no way, mathematically, to justify a loss of more than $70 billion in market cap.” And Facebook’s loss has been close to $120 billion from its peak valuation. Investors are sceptical that Facebook, along with Google, Twitter and other consumer tech companies, would face stringent regulations in America and the European Union in the aftermath of the Cambridge Analytica crisis.

“Tech and FANG [a term used for the collective stocks of Facebook, Amazon, Netflix and Google] are still trying to figure out what the way forward is, and the market is dealing with the aftermath of a massive rally. It’s hard to maintain that kind of momentum,” an analyst was quoted as saying.

Besides the plummeting stock, an independent forecast by eMarketer has hinted that ad prices for the Facebook News Feed could decline this year. eMarketer predicts that Google’s and Facebook’s duopoly in the American digital ad market might be a tad hit as rivals like Snapchat gain share. The Google-Facebook share of new digital ad dollars is expected to be about 48 percent in 2018, down from 73 percent in 2016.

Essentially, Facebook needs a major overhaul to prevent its 2.2 billion users from logging out.