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>> Facebook shares opened down 20% on Thursday, the steepest one day fall in the company's history. And it's taking the Nasdaq down with it. The drop follows a dismal forecast from Facebook executives who said profit margins would plummet for several years due to the cost of improving privacy safeguards following the massive Cambridge Analytica scandal.
In the first full quarter since the revelation that 87 million Facebook users had their personal data taken without their permission, growth in monthly active users, a key metric for the social network, came in below analyst expectations. Add weaker than forecast revenues and you get a stampede out of the stock, erasing roughly $150 billion in market value off the table.
Other big tech stocks like Amazon, Netflix, and Google, as well as Facebook competitors Twitter and Snapchat all falling after the report. It's what the profit warning says about Facebook's future business that really spooked Wall Street, says Reuters' Silicon Valley reporter Paresh Dave.>> They're expecting revenue to continue to grow more slowly.
Their expenses are growing even faster in part because they're responding to this privacy issues around the world.>> Facebook has been under non-stop scrutiny by government agencies in several countries and is the subject of a delete Facebook campaign not just for the breach, but for claims it helps promote hate speech and can be manipulated for political gain.
In an effort to win back public trust, Facebook has pledged to spend more to improve content and security. But Wall Street is now clearly worried that the spending may not buy back what Facebook has lost, credibility with users and investors.