After $120B Stock Tumble, Facebook Investors Claim Fraud

Facebook could lose $151 billion in market capitalization today

Facebook shares fell another 0.8 per cent on Friday, closing at $US174.89 on the Nasdaq. The lawsuit was filed by a shareholder of the social networking giant.

The lawsuit, filed by shareholder James Kacouris in a Manhattan federal court, could be the first of many claims over a disappointing earnings announcement by the social media and social networking service corporation.

It's been a rough year for Facebook and its investors.

Late Wednesday, Facebook warned that its revenue growth will slow down significantly for at least the remainder of the year and that expenses will continue to skyrocket.

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Kacouris said the marketplace was "shocked" when "the truth" began to emerge on Wednesday from the Menlo Park, California-based company. Last week had not been good for one of the most popular social media company, Facebook as it released biggest drop in its share prices in one single session. He said that it stemmed from various federal securities law violations by the company.

Facebook did not immediately respond to a request for comment.

In the United States, it is common for shareholders to sue companies after an unexpected stock price plunge happens.

The Cambridge Analytica scandal forced the company to be more conscious of its privacy policies and allow users more control over their data. Since then, many have been consolidated in the federal court in San Francisco.

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For numerous world's richest people, most especially Africa's billionaires, losing $16.8 billion in a day would be a wipeout. However, the titular chairman of the Berkshire Hathaway Inc.'s $83 million fortune without a doubt tops the Facebook owner's $66 billion.

Mr Buffett now ranks third among the world's billionaires, while Mr Zuckerberg is sixth. According to a report by Bloomberg, the 24 percent drop in Facebook's share valuation in after-hours trading is likely to be replicated in the normal trading session, which will cause Facebook's market capitalization to take a massive hit. This structure allowed Zuckerberg to maintain his voting control even if he decides to sell millions of shares. Unfortunately, this week's plunge changed everything.

"Nobody knows where the top is, where that growth slows down", said Phil Bak, CEO of Exponential ETFs and a former managing director of the New York Stock Exchange who said he's been warning investors of a potential sell-off in large tech stocks. An analyst at Pivotal Research, Brian Wieser gave his opinion on the future prospects of the Facebook's revenues: "While the company is still growing at a fast clip, the days of 30%+ growth are numbered".

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