Mark Zuckerberg loses $16.8 billion in a snap as Facebook plunges

26 July, 2018, 10:43 | Author: Salvatore Jensen
  • Mark Zuckerberg loses $16.8 billion in a snap as Facebook plunges

Shares in Facebook, which have risen about 23 per cent this year, fell 8.6 per cent to $198.71 in trading after the bell as investors reacted to the results. His fortune tumbled in late trading Wednesday, as shares of the social media giant slid 20% in post-market trading in NY on disappointing results.

"We are investing so much in security that it will have a significant impact on our profitability", said the CEO, Mark Zuckerberg, during the call, referencing a commitment he first announced in November 2017 in an effort to clamp down on foreign election interference, misinformation and hate speech.

Revenue, fueled by mobile advertising sales, increased 42 per cent to US$13.2 billion in the quarter, Facebook said Wednesday in a statement.

The company reported net income of US$5.11 billion, or US$1.74 a share, compared with analysts' average estimate of US$1.71 a share, according to data compiled by Bloomberg.

The chief financial officer, David Wehner, said: "Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4". Its average number of monthly active users for the period came in at 2.23 billion, or about 20 million fewer than projected.

Analysts attributed the user growth shortfall largely to European privacy rules that went into effect in May.

Facebook's after-hours decline was $133 billion, according to Dow Jones data gurus.

It's a rare moment of weakness for Facebook (FB) at a time when investors are scrutinizing the company carefully to determine whether there is any lingering damage from months of bad press, user outrage and regulatory scrutiny. Analysts who follow Facebook were blindsided, asking frequently on a conference call with executives for more information on exactly how the company's financial future had changed so dramatically. The legislation, known as the General Data Protection Regulation, cost Facebook about 1 million users in Europe, he said. Facebook's results prompted selling in other Nasdaq listings, including media and advertising rivals Inc, Netflix Inc and Alphabet Inc. Facebook said that family audience measures how many people it counts across all of its apps, including the main Facebook app, Facebook Messenger, WhatsApp and Instagram.

"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. There are now 2.5 billion people who used at least one of Facebook's apps in June, including Instagram, WhatsApp and Facebook.

Gene Munster, a venture capitalist at Loup Ventures, said in an email that Facebook is "entering a new period" where declining user growth will translate to slower revenue growth.

Facebook's shares had earlier closed in NY at US$217.50, a record high, and had gained 23 per cent this year.

Facebook's operating margin fell to 44 per cent in the second quarter from 47 per cent a year ago.

He added that Facebook has "a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter".



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