Facebook Shares Tumble More Than 20 Percent On Poor Earnings
26 July, 2018, 13:24 | Author: Corey Lynch
Zuckerberg in January said he was going to adjust the news feed to make sure people spend more time on Facebook with meaningful content from their friends and family members - a move the company has said would decrease user engagement with the site.
The results, announced after markets closed, sent Facebook's shares plunging 24% in extended trading.
Facebook shares were torched in after-hours trading on Wednesday, tumbling more than 20 percent after the social network revealed fewer daily and monthly users than expected in the second quarter - and forecast 2018 growth much lower than Wall Street forecast.
Revenue increased 42 percent to $13.2 billion in the quarter. The company is grappling with new data laws in Europe, criticism over its content policies and privacy issues.
But the number of people who use the network every day, representing Facebook's most devoted users, remained flat in the USA at 185 million.
During the conference call, Facebook executives warned that revenue growth rates will decline by "high single digit" percentages in the coming quarters. Facebook lost about $130 billion in market value in just two hours, its steepest stock decline ever, and the personal wealth of Facebook co-founder and chief executive Mark Zuckerberg also took a major hit, Mark Zuckerberg lost almost $17 billion in just two hours on Wednesday. Global DAU rates increased by 11% compared to the year-ago quarter, but they were still below what Wall Street was calling for. "This is a clear inflection point for Zuckerberg & Co.as the company's advertising fortress and MAU metrics still look "well intact" despite the massive potential headwinds caused by Cambridge and the overall privacy worries (GDPR) in Europe although challenges remain".
While Zuckerberg has vowed to address the problems through major changes to its business practices and investments in new resources, analysts that cover the stock have maintained a positive outlook, insisting that it would essentially be business as usual for Facebook's lucrative advertising operations.
Net income attributable to Facebook shareholders rose to US$5.11 billion, or US$1.74 per share, in the second quarter ended June 30 from US$3.89 billion, or US$1.32 per share, a year earlier.
The revenue shortfall reflects warnings from Chief Executive Mark Zuckerberg that Facebook's bottom line could be affected by costly measures it is taking to improve safety and security for its 2.23 billion monthly active users.
Facebook's revenue grew at its slowest pace in nearly three years. Together, the entire Facebook suite of products has 2.5 billion unique monthly users, the company disclosed for the first time.
Social networking giant Facebook (NASDAQ:FB) reported its Q2 2018 earnings today and we have to say that the tech giant has seen slightly better days. Facebook has largely saturated in the U.S. and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.
After-hours trade saw Facebook shares plunge by some 21 per cent, wiping out an estimated US$130 billion in market value if the slump is confirmed at Thursday's market opening.
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