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Facebook Inc. faces an investor class action over slowing revenue and user growth after the social networking platform suffered a one-day loss in value of nearly $120 billion.
Facebook stock fell around 20 percent after the company July 26 announced revenues and user growth below what was expected, investors said in a putative class action filed July 27. The company, CEO Mark Zuckerberg, and Chief Financial Officer David Wehner misled investors about user growth expectations and projected revenues, according to the complaint filed in the U.S. District Court for the Southern District of New York.
The Menlo Park, Calif.-based social platform has faced significant criticism in recent months over data privacy — particularly its past relationship with Cambridge Analytica, a data firm that used profile information obtained via a Facebook application as part of its work on President Donald Trump’s 2016 campaign. These concerns might have played into a decline in user growth, according to a Bloomberg report.
Facebook touted its daily and monthly active user figures without mentioning that they were in decline, the investors said. The company also misled investors about the potential ad revenue of Facebook’s new Stories feature, according to the complaint.
The company, which didn’t immediately respond to a Bloomberg Law request for comment, faced similar investor suits after the Cambridge Analytica news broke in March, followed by a stock drop. Facebook placed some of the blame for its recent poor performance on new European data privacy laws, according to a Bloomberg report.
The case is Kacouris v. Facebook Inc. , S.D.N.Y., No. 1:18-cv-06765, complaint filed 7/27/18 .
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