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

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

Facebook shares plunged in after-hours trading as much as 7% on Wednesday as the social media giant missed expectations on quarterly revenue and reported weak user engagement in the wake of the Cambridge Analytica data breach.

It reported 2.23 billion monthly active users and 1.47 billion daily active users, which were both up 11 percent year-over-year but narrowly missed estimates.

Wall Street didn't take too kindly to that: Facebook's stock price dropped almost 20 percent in after-hours trading.

The Cambridge Analytica scandal prompted several apologies from Chief Executive Mark Zuckerberg and generated calls for users to desert Facebook, which has grown strongly since launching as a public company in 2012.

Facebook generated revenue of $13.23 billion during the quarter ending June 30, compared to $9.32 billion during the same quarter a year ago.

Facebook's 2.23 billion monthly active users and 1.47 billion daily active users were both up 11 percent from previous year but also just shy of analyst predictions of 2.25 billion and 1.48 billion, respectively.

Revenue fell a little short of estimates - $13.23 billion, compared to the Thomson Reuters estimate of $13.36 billion.

"When it comes to much slower revenue growth, they're talking about currency headwinds, but more we think it's due to slower user growth given GDPR and more focus on privacy", said Morningstar analyst Ali Mogharabi.

Facebook suffered a blow in China on Wednesday when regulators there withdrew their approval of a company innovation hub to support local startups, the New York Times reported on Wednesday (local time), citing a person familiar with the matter. Despite the fact that the company earned $5.106 billion in profit and revenue was up 42 percent year-over-year, the stock was down.

Facebook shares fall as user growth slows
Facebook Stock Down 9% Following Q2 Revenue Miss, Slowing User Growth

Facebook faced a tougher climate in Europe since the new General Data Protection Regulation took effect at the end of May.

In the United Kingdom, especially, Facebook drew the ire of lawmakers, who hit the social network with a $650,000 fine, the maximum amount allowable for mishandling user data. Facebook and Instagram ad spending through 4C rose 48 percent year over year, according to Goldman.

"The market was expecting a lot more", Wieser says. It owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram.

Of the newer endeavors, Instagram's business model is the most mature, and likely contributed meaningfully to revenue in the quarter, analysts have said.

The company's founder and CEO Mark Zuckerberg is counting the cost of user disenchantment as his fortune tumbled by US$16.8 billion ($24.5 billion) in late trading on Wednesday, US time.

Despite the rocky quarter, Facebook shares had hit an all-time high before Wednesday's earnings report and its quarterly revenue was still up 42 percent from this time previous year. The company is also rapidly expanding its real estate around the world to accommodate a hiring spree, which includes thousands of new workers to help combat foreign election manipulation on the site.

It said it now employed 30,275 people, up 47% from a year ago. Furthermore, user growth, both DAUs and MAUS came below expectations at 1.47B and 2.23B, vs. consensus of 1.49B and 2.25B, respectively.

Executives warned that revenue growth would slow and expenses would rise.

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