Facebook experiences sluggish user growth in most of its markets, including the U.S. and Canada, in the second quarter of 2018.
After the company's chief financial officer said revenue growth would “continue to decelerate in the second half of 2018”, the news sent Facebook's stock price down by more than 20 percent after trading hours. What this means, Facebook lost about $130 billion from the company's value.
Investors feared the the social media giant that has shown tremendous growth in years, isn't actually immune to controversies.
Daily active users in the U.S. and Canada measured at 185 million. This is flat in the first quarter and only slightly higher than a year before. In Europe, the number of users fell for the first time from 282 million to 279 million. According to a the company's executive, this is a result of the European privacy law that went into effect in the second quarter. Revenue increased 42 percent to $13.23 billion, but missed analysts expectation.
Then there are expenses. It is said that they would rise faster than revenue, due to higher spending on product and infrastructure. The second-quarter margin was 44 percent.
The last time Facebook missed analyst estimates for revenue was in the first quarter of 2015.
While Facebook CEO Mark Zuckerberg called the results "another solid quarter", but those comments were overshadowed when other executives warned that tougher privacy laws, a shift toward less aggressive advertising products and others would reduce revenue growth.
Another thing that affected Facebook, is the impact it has made since the 2016 U.S. presidential election. The social network attracted heavy criticism for allowing fabricated news articles to flourish on the platform. This was intensified when the Cambridge Analytica scandal happened.
Zuckerberg acknowledged that Facebook needed to invest more in security measures to prevent the platform from being manipulated. He pledged that the company will continue building new products “because that wouldn’t be the right way to serve our community and because we run this company for the long term, not for the next quarter.”
“We are investing so much in security that it will have a significant impact on our profitability,” said the CEO, referencing a commitment he first announced in November 2017 in an effort to stop foreign election interference, misinformation and hate speech.
While the report showed slower-than-expected revenue growth for the period, Facebook has actually made some advancements in other criteria.
The first one, users logged in more than 40 percent. And earnings per share was $1.74, or up from $1.32 a year earlier. Then is the monthly active users that were up by 11 percent year over year to 2.23 billion, as were daily active users, at 1.47 billion.
Zuckerberg also revealed a new metric: 2.5 billion people use at least one of Facebook's apps (Facebook, Instagram, WhatsApp or Messenger) at each month.
He described Instagram in particular as an "amazing success" and said how the Instagram TV is a money-making potential. Facebook's chief operating officer, Sheryl Sandberg, said there were new opportunities to monetize the interactions between businesses and customers on both Facebook Messenger and WhatsApp.
So here, Facebook still managed to squeeze a little more money out of every user in general if compared with the previous quarter.
Zuckerberg lost at least $17 billion in his net worth with this news.