Facebook in old-style ad fight for life

FACEBOOK’S capital city advertising blitz — including posters on trams and ads during the footy —— shows how worried the social network is about the trust issues that saw its share price plummet this week, a leading economist says.

AMP chief economist Shane Oliver said it was ironic the online platform was using traditional advertising to try to win back users.

“I even saw a poster at Melbourne airport,” Dr Oliver said.

“The fact the advertising is talking about ‘fake news is not our friend’, tells you Facebook recognises the problem.”

Facebook shares tanked by 19 per cent in the US overnight Thursday following a year of scandals such as “fake news” and Cambridge Analytica.

The rout — the single biggest one-day loss by a company in Wall Street history — wiped $US119.1 billion ($A161.3 billion) from Facebook’s market value.

That is more than the combined market capitalisation of ANZ at $85 billion and National Australia Bank at $77.6 billion.

It was the largest loss of value in one day for a US traded company, with the sell-off following Facebook‘s revelations of slower-than-expected revenue growth as many users log off.

The 34-year-old Mr Zuckerberg’s own fortune took a huge whack, dropping him down three rungs on the Bloomberg Billionaires Index to be the sixth-richest person.

His personal wealth dropped $US15.9 billion (or $A21.5 billion) to hit $US70.6 billion.

The fall in his personal wealth is two times the market value of Qantas airlines which is valued at $A11 billion.

Dr Oliver said the Facebook ructions “provide a warning” for investors about the valuation of tech companies.

He also said the growth of “passive investing” had seen money flow into these tech stocks simply because they were growing.

Passive investing generally sees a manager seek to emulate the performance of a particular index by buying a weighted portfolio to ape its growth.

“If you want to see an example of the downside of momentum investing which can get amplified in passive funds, just look at Facebook,” Dr Oliver said.