Thursday, 16 August, 2018

Facebook shares plunge 8.6 percent after missing estimates on monthly active users

Facebook Inc CEO Mark Zuckerberg's fortune tumbled by US$16.8 billion in late trading Wednesday Facebook Inc CEO Mark Zuckerberg's fortune tumbled by US$16.8 billion in late trading Wednesday Chip Somodevilla Getty Images
Cristina Norman | 26 July, 2018, 13:26

The lower-than-expected users and revenue shows that Chief Executive Zuckerberg's cash-producing machine may not be totally impervious to controversy. That figure includes some $2.7 billion in cash and real estate, according to Bloomberg's Billionaire index. It would also wipe his $13.7 billion of gains for the year, leaving him with just less than $70 billion.

Facebook Inc saw the first signs of user disenchantment in the midst of public scandals over privacy and content, with second-quarter revenue and average daily visitors missing analysts' projections. The social media company posted revenue of $13.2 billion in the period, also short of Wall Street estimates.

Only months after a data privacy scandal, Facebook is seeing fewer frequent users than it expected, according to CBS News.

Facebook's growth is slowing with users in some of its most lucrative markets. 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. The company displayed mixed results in its Q2 2018 earnings and this can be contributed to the GDPR, Zuckerberg's testimony before Congress, as well as more scandals that might have contributed to Facebook's weak user growth for this quarter.

"There is never a "right time" for a transition like this, but the team and the company boast incredible talent and will navigate this well", Stretch said on his Facebook page. The company remains in a dominant position in mobile advertising alongside Alphabet Inc.'s Google.

About 2.5 billion people use at least one of the company's apps each month, Facebook said on a conference call with investors and analysts.

Facebook said it had 1.47 billion daily active users in June, compared with the 1.48 billion average of analysts' estimates compiled by Bloomberg.

Incidentally, Facebook's numbers witnessed a marked decline even in important markets like the United States, Canada and the European Union, where the company took a direct hit in terms of DAU due to the implementation of the General Data Protection Regulation (GDPR). In Europe, Facebook had to respond to new privacy rules.

Facebook warned that a slowdown in revenue growth will continue through the second half of 2018, with expenses soaring 50% to 60% year over year.

There's a scratch in Facebook's Teflon coating as the social networking company loses approximately US$150 billion ($219b) in market capitalisation in under two hours, Reuters has reported.

Facebook shares closed about 3% high on Wednesday during regular trade hours but dropped as much as 24% in after-hours trade following a poor earnings report.

Zuckerberg said Wednesday that he was hopeful Facebook would be able to limit disinformation and fake accounts, and that the company was able to do so in elections this year in France, Mexico and Germany.

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