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Over $109bn wiped off Facebook’s market cap after growth shock

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More than $109bn (£83bn)was been wiped off Facebook’s market value on Thursday, including a $14.5bn hit to the fortune of founder Mark Zuckerberg, after the company warned investors that user growth had slowed in the wake of the Cambridge Analytica data leak scandal.

Facebook’s shares collapsed by 18% when the stock market opened in New York a day after the Silicon Valley company revealed that 3 million users in Europe have abandoned the social network since the Observer revealed the Cambridge Analytica breach of 87m Facebook profiles and the introduction of strict European Union data protection legislation.

The plunge in Facebook’s share price puts the social network on track to rack up the biggest ever one-day drop in a company’s market value. The previous record-breaking collapse was when Intel lost $91bn on one day in 2000.

The single biggest loser is Mark Zuckerberg, Facebook’s founder and chief executive, who owns nearly 17% of the company. Zuckerberg’s paper fortune fell by $14.5bn from $86.5bn Wednesday to $72bn on Thursday, sending him tumbling from the third-richest person on the planet to sixth.

The stock market collapse came after the company warned investors to expect a significant decline in growth rate, and revealed that the number of users in Europe had fallen from 282 million to 279 million.

David Wehner, Facebook’s chief financial officer, said on Wednesday the company’s decision to give its users “more choices around data privacy” following the Cambridge Analytica scandal “may have an impact on our revenue growth”.

“Our total revenue-growth rates will continue to decelerate in the second half of 2018, and we expect our revenue-growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4,” he said. “Looking beyond 2018, we anticipate that total expense growth will exceed revenue growth in 2019.”

He warned investors to expect a big jump in costs related to its efforts to improve data handling and an advertising drive to reassure users. “Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis,” Wehner said.

Zuckerberg has been hauled before Congress to answer questions about the data breach scandal, in which data from 87 million users’ profiles was harvested for use in political advertising before the 2016 US presidential election. Facebook is also under investigation by the FBI, the US Department of Justice, and the Securities and Exchange Commission.

The UK’s information commissioner fined Facebook a maximum £500,000 for breaches of the Data Protection Act.

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