The company’s second-quarter results caused shares to plunge as much as 24 percent in after-hours trading, driving the market value down by $151 billion at one point. If the sell-off hits these levels in Thursday trading, it will be one the largest collapses in value ever suffered by a U.S.-traded company in a day.

And for those hoping for a swift bounce back, the company told Wall Street the numbers won’t get any better this year. Chief Financial Officer David Wehner said revenue growth rates would decline in the third and fourth quarters. Analysts who follow Facebook were blindsided, asking frequently on a conference call with executives for more information on exactly how the company’s financial future had changed so dramatically.

Gene Munster, an analyst from Loup Ventures said “the company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter,”

Eoin Treacy's view

Niru Devani’s view

Facebook is now the second member of the FAANG gang to disappoint following Netflix’s results last week which also fell short of expectations although Alphabet’s results pleased investors. Facebook opened down almost 20 percent today which wiped out $120bn from its market capitalisation after closing at a new record high of $217.50 yesterday. Before today, the share price had risen by 40 percent since the data privacy scandal in late March. This explains partly the violence of the move down – there was little room for disappointment.

There were two key concerns for investors. The company signalled a significant slowdown in revenue growth for the third and fourth quarters as well as forecasting declines in operating margins over the next three years or more. Regulation has just started to bite and will be specifically negative for Facebook. But, the company does have a lot of growth levers including  What’s App which it has not yet started to monetise. Additionally, Facebook is regarded by many as undervalued with an enterprise value to earnings multiple below the average for the technology sector. However, it would be surprising if the share price recovered quite as quickly as it did from the data privacy issue.

More broadly, we are seeing significant volatility in the Nasdaq 100 which incidentally also closed at a new high yesterday but is down by 1.23 percent at the time of writing. The trend has been very strong trend but the level of volatility we’ve been seeing recently could herald a larger correction towards the trend mean.  Faangs are the most popular shares with investors. For the sixth straight month, fund managers surveyed by Bank of America Merrill Lynch at the start of the month said ‘’long Faang+Bat’’ was the market’s most crowded trade. Bat stands for Baidu, Alibaba and Tencent.  The overriding message is that these stocks in particular and the sector in general are over-owned, have risen substantially and the p/e unlike the S&P’s, has not shrunk, therefore risks have increased in the near term. The medium term outlook is very positive for the technology sector.