Biggest loser
Mark Zuckerberg down $16 billion –in one day
FACEBOOK chief executive Mark Zuckerberg was facing pressure to abandon his dual role as chairman and chief executive after $119bn (£91bn) was wiped from the value of the group in the single biggest one-day loss of value for any company in US market history.
The Silicon Valley giant, which for years has served as a reliable cash cow for shareholders, warned of slowing growth, rising costs and missed revenue targets, sending shares in the company plunging when US markets opened yesterday.
Mr Zuckerberg’s failure to inspire confidence on a call with investors prompted Facebook’s share price to fall by nearly 20pc, which wiped $16bn off the social network founder’s personal fortune. The plunge, however, only left Facebook’s share price back at a level last seen in May, underlining how fast technology stocks have been rising this year on Wall Street.
The shareholder revolt was led by Boston-based Trillium Asset Management, which holds $11m of stock. The activist investor issued a call for Mr Zuckerberg to end his dual role at the company, which has been rocked by a string of scandals over privacy and a failure to police fake news, extremist and violent content.
Trillium senior vice president Jonas Kron told The Daily Telegraph: “We want Facebook to be sustainable and we think in order to do that they need to change their governance. He controls 60pc of the vote so it’s ultimately his decision.”
A proposal sent to Facebook’s board by Trillium said: “We believe this lack of independent board chairman and oversight has contributed to Facebook missing, or mishandling, a number of severe controversies, increasing risk exposure and costs to shareholders.”
The fall was the largest drop ever for a Us-listed company and led to the biggest ever drop in the net value of an individual in a single day. It has been compared to Intel’s $91bn plunge in value at the turn of the millennium. Others suggested the loss was comparable to “Marlboro Friday” when tobacco giant Philip Morris saw its shares hit for 20pc in 1993.
Dislodging Mr Zuckerberg from an executive role would be difficult because his dual share ownership gives him control of more than 60pc of the voting rights of the $500bn social media company. Trillium is also a relatively small shareholder.
Nevertheless, industry experts have bemoaned the company’s self-inflicted wounds and mishandling of controversies in recent months, and other shareholders have expressed similar views. Nordea’s head of sustainable finance Sasja Beslik, who earlier this year halted his fund’s investment in Facebook, said: “It’s one of the things that Facebook could do to improve perception within the investment community.”
Last year a similar package of measures was proposed to investors. It won 51pc of votes from shareholders who were not Facebook executives or board members. In an interview this month, a US tech journalist joked with Mr Zuckerberg that only he could fire himself. Trillium’s proposal will be voted on in May 2019.
On Wednesday, Facebook reported
revenues of $13.23bn for the three months to the end of June, up from $9.2bn a year earlier, but missing analysts’ expectations of $13.36bn. Facebook reported daily active users, a key metric for measuring how many people are using the site, had fallen in markets like Europe.
Investors are starting to fear that Facebook is reaching its limits in terms of growth in its most valuable markets. Former Facebook product manager Antonio García Martínez said the company had “hit a growth wall”.
While the company has been shaken by a data scandal over its sharing of personal data with political research companies like Cambridge Analytica, the real concern for investors appears to be Facebook’s slowdown in its most important markets, which have become saturated.
Baird analyst Colin Sebastian said “these are ‘self-inflicted’ issues to a large degree”. The bruising day also extended to other tech giants, adding to concerns that the tech-stock rally of the last 12 months may be coming to an end.