Facebook Hit With Lawsuit After Historic Stock Plunge
Facebook and its CEO Mark Zuckerberg are facing a lawsuit over his company’s historic stock market plunge where it lost close to US$120bn in a single day, the most in US history.
According to Reuters, shareholder James Kacouris filed a complaint in the Manhattan federal court accusing both Zuckerberg, CFO David Wehner and Facebook of making ‘misleading statements about or failing to disclose slowing revenue growth, falling operating margins and decline in active users’.
He claims the marketplace was ‘shocked’ when the ‘truth began to emerge’ from the social media giant. He also claims the massive plunge stemmed from ‘federal securities law violations from the defendants’.
During a call to shareholders to speak about the second quarter results Zuckerberg admitted the company saw a decline in monthly actives in Europe around one million people.
Wehner added saying, “European ad revenue growth decelerated more quickly than other regions and was impacted primarily by reduced currency tailwinds and, to a lesser extent, the roll-out of GDPR.”
These quotes and average results from its second quarter caused Facebook’s stocks to drop a whopping 19 per cent overnight. Its daily active users and earnings per share also took a hit.
This is not the first time the social media company has faced lawsuits this year with the company dealing with the aftermath of the Cambridge Analytica scandal.
Currently, its stocks are at US$174.89 down 0.78 per cent.