LONDON (BLOOMBERG) – Reports of global outages for users of its social media apps helped fuel the biggest drop in Facebook’s shares in nearly a year on Monday (Oct 4).
The tech giant is also facing questions from a whistle-blower who will be testifying before the United States Congress.
Facebook shares closed down 4.9 per cent, the most since Nov 9 last year. The stock has fallen about 15 per cent since hitting a record on Sept 7.
Chief executive Mark Zuckerberg’s personal wealth fell by nearly US$7 billion (S$9.5 billion) in a few hours, knocking him down a notch on the list of the world’s richest people.
The stock slide on Monday sent Mr Zuckerberg’s worth down to US$120.9 billion, dropping him below Microsoft’s Bill Gates to No. 5 on the Bloomberg Billionaires Index. He has lost about US$19 billion of wealth since Sept 13, when he was worth nearly US$140 billion, according to the index.
On Sept 13, The Wall Street Journal began publishing a series of stories based on a cache of internal documents, revealing that Facebook knew about a wide range of problems with its products – such as Instagram’s harm to teenage girls’ mental health and misinformation about the Jan 6 Capitol riots – while downplaying the issues in public. The reports have drawn the attention of government officials, and, on Monday, the whistle-blower revealed herself.
In response, Facebook has emphasised that the issues facing its products, including political polarisation, are complex and not caused by technology alone.
Facebook’s share plunge came amid a broad tech rout on Wall Street amid concern that surging prices for raw materials risk fanning inflation and sapping economic momentum.
Amazon.com dropped 3 per cent, followed by Apple sliding 2.5 per cent. Microsoft lost 2.1 per cent and Google parent Alphabet retreated 2 per cent.
Technology stocks are bearing the brunt of selling amid a spike in Treasury yields on inflation fears. Treasury yields are used to calculate the present-day value of profits expected to be delivered far into the future. A sustained rise in Treasury yields is hurting the earnings outlook for companies with high valuations.