Facebook user numbers disappoint, stock nosedives

26 July, 2018, 13:24 | Author: Teresa Adams
  • Facebook CEO Mark Zuckerberg. Facebook on Wednesday reported second-quarter sales and user growth that fell short of analysts’ projections

The fleeing of one million users is but a drop in the ocean to Facebook, which now has over 2.2 billion active monthly over-sharers on its website.

Facebook Inc fell short of analysts' estimates for monthly active users on Wednesday and reported lower-than-expected quarterly revenue, months after the social network became embroiled in a data scandal affecting millions of users.

The 34-year-old Facebook billionaire, who had been worth as much as $86.5 billion when Facebook stock traded at an all-time high earlier in the day, now has a net worth of about $68.9 billion, based on regulatory filings with the U.S. Securities and Exchange Commission.

But there's also been a notable slowdown in user growth.

The plummeting stock price wiped out as much as $150 billion in market capitalization and erased the stock's gains since April when Facebook announced a surprisingly strong 63 percent rise in profit and an increase in users.

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Ross Gerber, an analyst at Gerber Kawasaki, said the latest figures suggest that the tide may be turning for Facebook and other social networks.

CFO Wehner attributed the slowing growth to currency fluctuations, as well as the company's focus on "growing new experiences such as stories" and "giving people who use the services more choice around privacy". The company's leaders, including its chief executive, Mark Zuckerberg, added that the trajectory was not likely to improve anytime soon, especially as Facebook spends to improve the privacy and security of users.

But he added that "we run this company for the long term, not for the next quarter".

Daniel Ives, head of technology research at GBH Insights, said in a note that investors "clearly viewed Cambridge as a 'blip on the radar, ' although some soft spots in the advertising and overall user metrics will fuel the debate about further bumps in the road" for Facebook.

What is your opinion over Facebook's Q2 2018 earnings?

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Facebook's founder is the media company's largest shareholder, with 12.8% of its shares outstanding.

The social network fessed up to the exodus during its second-quarter earnings on Wednesday, admitting that the implementation of GDPR saw it lost a good swathe of European users. Facebook has largely saturated in the United States and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.

Still, Zuckerberg assured investors that Facebook continues to see growth on its core platform, as well as its other properties, which include Instagram, WhatsApp and Messenger. The company doesn't break out Instagram's revenue.

Before the results were announced, Facebook's shares had closed in NY at $217.50, a record high, and had gained 23% this year.

Facebook has said it will increase spending to make investments in video content, and on new bets like artificial intelligence and virtual reality.

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Analyst Ross Sandler with Barclays asked if revenue growth was set to drop to "around 20% by the fourth quarter of this year".

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