Facebook and its founder Mark Zuckerberg face in what is supposed to be the first of the many lawsuits lining up over the company's poor earnings report.
James Kacouris, a shareholder of the social media company, filed a legal complaint against Facebook, Zuckerberg, and Chief Financial Officer David Wehner at a Manhattan federal court, a report said.
Kacouris accused the defendants "for misleading statements about or failing to disclose slowing revenue growth, falling operating margins and declines in active users."
The company lost a record high $USD119 billion of its value on Thursday, July 26. This is by far the biggest one-day loss ever recorded in US market history.
Shares have gone down to almost 19 percent or USD$41.24 per share from USD$176.26, in a single day.
This shocking market plunge exceeds that of Intel's market result in September 2000, when it registered a USD$91 billion single-day loss.
According to Kacouris, the wipeout could be blamed from the federal violations the company incurred.
In a statement, Facebook chief operating officer Sheryl Sandberg said that the recent enactment of the General Data Protection Regulation (GDPR) may have something to do with the huge decline of platform users, thus affecting the company's market standpoint.
"GDPR has not had a significant (ad) revenue impact, but we also recognize it wasn't fully rolled out this quarter," the Facebook official was quoted as saying by CNBC.
One of the policies enacted in the said security regulation gives the users more control over their online data.
The downward trend, as evident in EU, may continue to pose "more risk" in the future of the company.
"We continue to focus our product impact on putting privacy first, and that's going to have some impact on revenue growth," Wehner went on to clarify during an investors meeting.
Moreover, analysts are putting blame on some of the platform's new features the company has heavily invested in like the "Stories" which apparently has low revenue potential.
Still, experts are factoring in the effect of currency fluctuations which recently puts the US dollar at a weaker stance.
For some, the Thursday market "shock" didn't come as a big surprise at all.
A report from Forbes revealed about the selling activities that happened in the recent months among Facebook insiders, including Zuckerberg himself.
According to the report, Zuckerberg and those close to the company have sold off a total of USD$3.8 billion worth of shares in just a span of three months.
