Facebook stock saw a sudden rout in its value yesterday after it released a dismal quarterly report. It is the biggest one-day loss in the market value of any company in the U.S. which resulted in almost US$119 million being wiped out in market capitalization. This made Gene Munster of Loup Ventures advice investors to abstain from pouring money into the stock for the time being. He made the statement on CNBC’s Fast Money.
Facebook’s unimpressive performance with respect to revenue generation was because of a reduction in the number of daily active users in Europe. The social networking giant also warned of a weak performance vis-à-vis revenue generation in the second-half of the year as well. This sent its shares tanking by about 20%.
Facebook CFO Warns of Declining Revenue Generation in Next Two Quarters
As per the CFO of Facebook, David Wehner, the growth in revenue is set to decline in single-digit percentages from previous quarters in the next two quarters of this fiscal year.
Munster labelled the move as a sudden guide-down, stating that the company wasn’t quite right in weakening the guidance all of a sudden. Nevertheless he added that the announcement would mean that there would be issue in the coming quarter which would further drag down growth.
He felt that with the announcement Facebook also successfully managed to reset expectations of the public. He also advised investors to not get misguided by analysts who are treat the tumbling Facebook stock value as a buying opportunity.