Facebook shares plunged by as much as 23% in after-hours trading Wednesday as the social media giant warned of slowing growth in coming quarters as it ramps up spending to address concerns about data privacy and "fake news" on the platform.
Chief Executive Mark Zuckerberg said the company “will continue to invest heavily in security and privacy,” adding that the associated cost would likely hurt profitability in upcoming quarters. Facebook has taken steps to address concerns about data privacy and “fake news” on the platform.
Expenses will rise by 50% to 60% this year as Facebook invests in data security, new technology and other initiatives, CFO David Wehner said.
The company missed expectations for second-quarter revenue and reported sagging user growth in key markets after the Cambridge Analytica data breach.
Facebook’s tally of second-quarter global daily active users, a key metric for tracking user engagement, rose 11% to 1.47 billion. Analysts had expected 1.49 billion daily active users. The company reported a total of 2.23 billion monthly active users, below a projected 2.25 billion.
User growth stalled in the key U.S. and Canada region, as the platform’s base 241 million monthly active users was unchanged compared to the first quarter. Monthly users declined slightly in Europe after the implementation of new data privacy regulations in the region.
Revenue also fell short of Wall Street’s expectations, rising 42% to $13.23 billion, less than the $13.36 billion estimate polled by Thomson Reuters. Advertising revenue also fell slightly short of estimates despite rising 42% to $13.04 billion, with mobile advertising accounting for 91% of that total.
The company beat on earnings, which rose 32% to $1.74 per share against an expected $1.72. The social media giant has faced unprecedented scrutiny since reports surfaced that British data firm Cambridge Analytica had improperly accessed the personal data of up to 87 million users.
The second-quarter marked the first full financial period since the data breach became public knowledge.
The after-hours drop in the shares on Wednesday came as the stock hovered at an all-time high with gains of over 21% this year.
This is a breaking story and will be updated.
DrunkenGolfer on July 26th, 2018 at 03:04 UTC »
For me, Facebook has jumped the shark. It is no longer cool with young kids and shit. I can surf reddit for hours and be entertained. With Facebook, I want to keep,up with the happenings of friends and family, but it is impossible to separate the 20% stuff I want to see from the 80% I don’t.
I made it my mission to try to get my “feed” meaningful. For each item, instead of just scrolling g past, I made a conscious decision to do something with each one. I’d click “unfollow”or “hide” or “see less like this” but it made no difference. The departing content would just be filled with more crap I have no interest in. Add to that the fact that they have started jamming commercials in the middle of videos and it has become even more annoying. I just don’t see anything but decline from this point forward.
shompyblah on July 26th, 2018 at 02:53 UTC »
Facebook turned to shit the moment the news feed no longer defaulted to most recent.
Jacksrabbit on July 25th, 2018 at 23:24 UTC »
Does anyone know what the new privacy regulations have to do with the decline in monthly users? I don't understand the connection there...