Mark Zuckerberg, chief executive officer and founder of Facebook Inc., speaks during the Viva Technology conference. (Photographer: Marlene Awaad/Bloomberg)

Facebook Is Now $120 Billion Smaller

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Facebook Is Now $120 Billion Smaller

The Incredible Shrinking Facebook

(Bloomberg Opinion) -- People have complained for a while now that Facebook Inc. is too big. Well, good news: It just got 20 percent less big in a hurry.

Facebook’s market valuation collapsed by about $120 billion today – roughly the equivalent of a General Electric Co. or a 3M Co. – personally costing Mark Zuckerberg $15 billion in just the first few minutes of trading. He will now be forced to carry on with just $71 billion. Thoughts and prayers.

Driving all this pain was an earnings report Shira Ovide describes as “utter disaster for investors.” The raw numbers – 42 percent revenue growth, 2.5 billion global users – don’t sound disastrous. But growth rates have slowed dramatically:

Facebook Is Now $120 Billion Smaller

Investors had gotten used to the idea of Facebook growing to the sky forever. And those days appear to suddenly be over, Shira writes.

Of course, Facebook is still growing and still worth more than $500 billion. Matt Levine suggests being able to lose a record $120 billion in one day “is a more impressive financial accomplishment than anything that almost any other company has done in the history of stock markets.” 

And maybe investors shouldn’t have been so surprised. Facebook has been under relentless fire for a host of sins, including its use of private data and its inability/unwillingness to police toxic content. It has warned investors it will spend a lot of money to address some of those problems. But Shira, in a second column, suggests even Facebook wasn’t quite aware of how revenue, profitability and user growth would all come to a screeching slowdown at once. Maybe that #DeleteFacebook movement wasn't such a joke after all.

The Trade War Pain Has Just Begun

Though President Donald Trump and European Commission President Jean-Claude Juncker struck a truce yesterday that temporarily cooled tensions between the U.S. and EU, the conflict isn’t over yet. Bloomberg’s editors applaud Trump for seemingly recognizing he needs a different approach, though they wonder how long he will keep the peace. 

All trade wars are dangerous, Noah Smith writes, but they don’t all have to be dumb. And getting the EU on your side in trying to change China’s trade practices is one way to make a trade war smarter, Noah says – assuming, again, that Trump has actually accomplished such a thing, which is still unclear.

Trump’s trade-war timing has certainly been bad, writes Stephen Gandel. It may not hurt wealthy stock investors much, but it could hurt wage-earners who have been waiting for substantial raises for a long, long time. Barry Ritholtz notes that, even with Wednesday’s truce, the steel and aluminum tariffs that have hurt corporate profits are still filtering into consumer prices: “I am starting to consider the very real possibility that the latest White House trade policies will indeed have a signficiant negative economic impact, and do very real damage.”

More Trade-War Dispatches:

The Numbers Behind the Four Percent Number

The U.S. Commerce Department is due to release its first estimate of second-quarter gross domestic product growth tomorrow. Economists expect it to clock in at 4 percent or more, likely inspiring some end-zone-dance tweeting from Trump (either before or after the actual release). But this report looks backward, and it may be puffed up by businesses trying to get stuff done ahead of the trade war, writes Danielle DiMartino Booth. Since then, moods seem to have soured quickly: “Something is amiss in Corporate America. Both national and regional surveys reveal a sinking sense that the economy’s tailwinds are shifting to headwinds.” 

Certainly, the business-investment boom that some expected to follow last year’s tax cuts hasn’t shown up in the numbers in a meaningful way, writes Justin Fox:

Facebook Is Now $120 Billion Smaller

Trump’s Cabinet Tensions

Trump somehow seems to have marginalized his national security adviser John Bolton, writes Hal Brands. Confounding expectations when Bolton joined the White House, the president has taken dovish stances on many issues – with the exception of Iran. So why does Bolton stick around? It could be a sense of duty, or it could be that it’s all worth it for a chance at cracking down on Iran, Hal writes. 

Meanwhile, Trump has also put his FCC Chairman Ajit Pai in a terrible spot, writes Joe Nocera. Trump blasted Pai on Twitter for suggesting Sinclair Broadcast Group Inc. may not be able to buy Tribune Media Co. It just so happens that Sinclair “is as pro-Trump as any media company in the U.S. — Fox included,” Joe writes. Now Pai either has to toss aside the rule of law or further infuriate his boss.

Developments in Mueller-Land

Speaking of Trump making trouble on Twitter, the New York Times reports special counsel Robert Mueller is looking at Trump’s Twitter outbursts for evidence of obstruction of justice. As crazy as this might sound, Noah Feldman writes they could help Mueller prove corrupt intent or an intention to influence an investigation. Oh, and they aren’t protected by the First Amendment.

Meanwhile, a handful of House Republicans have moved to impeach Deputy Attorney General Rod Rosenstein, as possibly sort of a warning flare at Mueller. This is both pointless and also gutless, writes Stephen Carter – it shows Republicans know they’d suffer political consequences for going right at Mueller.

Chart Attack

Royal Dutch Shell PLC and ConocoPhillips are being unfairly punished for being slightly less than perfect, writes Liam Denning.

Facebook Is Now $120 Billion Smaller

Speed Reading

Now that Qualcomm Inc.’s bid for NXP Semiconductors NV is dead – likely a casualty of the trade wars – it’s still got big troubles. –  Brooke Sutherland.

The Democrats have a 50-50 shot of taking back the Senate. – Jonathan Bernstein

New Alzheimer’s drug results from Biogen Inc. and Eisai Co. are promising – but not the home run investors or patients wanted. – Max Nisen

Pakistan’s new prime minister must stabilize the economy in a hurry. – Andy Mukherjee 

ICYMI

Amazon beat estimates. Stocks fell. Nobody drives 65 in New Jersey.  Sergio Marchionne had been gravely ill for a year, it turns out.

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Note: Please send boats, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gongloff is an editor with Bloomberg Opinion. He previously was a managing editor of Fortune.com, ran the Huffington Post's business and technology coverage, and was a columnist, reporter and editor for the Wall Street Journal.

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