Economy

Facebook Stock Down 9% Following Q2 Revenue Miss, Slowing User Growth

Facebook Stock Down 9% Following Q2 Revenue Miss, Slowing User Growth”

In announcing its latest earnings on Wedneday, the social media company reported 2.23 billion monthly active users, shy of Wall Street forecasts of 2.25 billion.

Still, the loss of users should not have shocked investors because Facebook has said for the past two quarters that it was starting to hit the zenith of user growth in its most mature markets like North America.

"Our community and business continue to grow quickly", Facebook CEO Mark Zuckerberg said in a statement.

Ad sales in the second quarter rose 42 per cent to US$13.04 billion but costs, bolstered by moves to improve content and security after the data scandal, rose 50 percent from a year earlier to US$7.37 billion.

The company reported $US5.1 billion in profit, or $US1.74 per share, compared with the average estimates of $US5.1 billion and $US1.72 per share among research gathered by Thomson Reuters.

Total revenue rose 41.9 per cent to US$13.23 billion.

Now Facebook's market value sits at $483 billion, with shares falling about 24% in after hours trading.

Indeed, Wehner said Facebook's revenue growth rate, year over year, will drop by "high single digits" in this quarter and in Q4.

Separately Wednesday, Facebook general counsel Colin Stretch, who advised the company through a series of probes and investigations into data privacy, said he would be leaving for personal reasons.

Throughout the earnings call, efforts were made to highlight the fact that the company's future growth would not come from the core Facebook platform but from its other properties, including its messaging apps and Instagram.

"Over the next several years, we would anticipate that our operating margins will trend toward the mid-30s on a percentage basis", Wehner said.

Active user growth was also a huge miss. Instagram last month reported it had hit 1 billion monthly users for the first time, up from 800 million in September.

"So far, there has been no evidence that shows that controversies, such as the spread of fake news, Russian interference in the USA elections, and the Cambridge Analytica scandal, have prompted advertisers to divert ad dollars", says Haris Anwar, senior analyst at Investing.com.

About 2.5 billion people use at least one of the company's apps each month, Facebook said.

Almost all social media services have received greater scrutiny since USA intelligence agencies in January 2017 revealed that organisations tied to the Russian government had seeded content on the platform to shake up the 2016 U.S. presidential election.

For advertisers, though, Facebook and Instagram are performing as well as ever. "We did see a decline in monthly actives in Europe, down by about 1 million people as a result", Zuckerberg said on conference call.

The company remains in a dominant position in mobile advertising alongside Alphabet Inc.'s Google.

"Overall, this is a critical year for Facebook".

"It wouldn't be surprising if a couple million very irritated Brits left Facebook", says Brian Wieser, analyst with Pivotal Research.



Like this

loading...
loading...

Latest


26 July 2018
China to invest $14b in South Africa
Brazil, Russia, India and China invited SA to join the group in December 2010. The five countries' GDP is now more than 90% the size of U.S. output.

26 July 2018
Russian Federation slams United States general, says he 'discredited' Trump
We've included the entire video clip of the exchange below (including the omitted portion of Mason's question). He said the proposal had been passed on to the Russians by Trump's national security advisor John Bolton .

26 July 2018
Hip-Hop Reacts To Demi Lovato’s Reported Hospitalisation For Alleged Drug Overdose
Friends of the singer allegedly claim there were "big warning signs for weeks" that she was struggling before the incident. As previously reported, Lovato was found unconscious at her Hollywood Hills home just before noon yesterday.

26 July 2018
Here's Why Facebook Is Thinking About Launching a Satellite Into Orbit
Connecting remote parts of the world and bringing the entire globe online has been their self-proclaimed mission for a while. The company Facebook started to create satellites that will be deducted from the orbit of the Earth.

25 July 2018
Liquid water 'lake' is discovered on Mars
The lake, believed to be minus-90 degrees Fahrenheit, is similar to what lies beneath the ice cap in Greenland and the Antarctic. Those pulses reflected 29 sets of radar samples that created a map of drastic change in signal nearly a mile below the surface .

25 July 2018
Trump lashes out at Michael Cohen after release of recording
Cohen has a lot more information to release, and he apparently doesn't care whether it puts Trump in harm's way. The contents of the other tapes are unclear. " Michael Cohen has made a turn", Davis told Axios on Wednesday.

25 July 2018
Cavs.com Feature - Feeling the Love
He will be paid $28.9 million in 2019-20, $31.3 million in 2020-21 and 2021-22, and $28.8 million in 2022-23. The pundits have had Kevin Love on the trading block seemingly from the moment he arrived in Cleveland.

25 July 2018
Demi Lovato Reportedly Hospitalized For An Overdose
The former Disney star and her family have been open about their struggles with mental health and addiction in the past. The statement did not provide any details on what led to the singer's hospitalization.

25 July 2018
Ookla Reveals Slower iPhone Internet Speeds Compared to Samsung, Google
In the analysis used more than a million speed tests, which were carried out by the users themselves with the help of Speedtest. Several reports in the past have pointed out that the Intel-powered iPhone X is slower than the Qualcomm-powered iPhone X.

25 July 2018
Amber heatwave alert for Surrey and Hampshire
There is a slight chance that power cuts could occur and other services to some homes and businesses could be lost. The hottest July day on record is 36.7C (98F), which was reached at Heathrow on July 1, 2015.