Facebook hit by scandals, misses revenue and user growth estimates

Facebook CEO Mark Zuckerberg. Facebook on Wednesday reported second-quarter sales and user growth that fell short of analysts’ projections

Facebook shares fall as user growth slows

The lower-than-expected users and revenue shows that Chief Executive Zuckerberg's cash-producing machine may not be totally impervious to controversy.

As part of its second quarter of 2018 earnings announcement on Wednesday, the company trumpeted a huge jump in both year-over-year revenue (42 percent) and profit (31 percent). Fourteen analysts surveyed by Zacks expected $13.43 billion.

Facebook on Wednesday reported second-quarter sales and user growth that fell short of analysts' projections.

Advertising revenue, the lifeblood of Facebook's lean business model, came in at $13.04 billion, below the Street's $13.16 billion estimate.

Facebook also reported that its user base in Europe had shrunk because of a new privacy law there, marking one of the few times in the social network's history that it has reported a user decline in any region. 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.

However, as usual, Wall Street analysts come to the defense of Facebook stock on any pullback whatsoever.

He said the challenges included regaining public trust as well as increasing the number of people joining Facebook and the time they spent on the platform. Those problems hadn't mattered to the success of the business - until now.

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In addition, Facebook said its daily active users rose 11 percent from a year earlier to 1.47 billion, compared with 13 percent growth in the previous quarter.

Still, the news caught analysts by surprise after 12 straight quarters in which Facebook exceeded analysts' expectations.

Facebook's revenue grew at its slowest pace in nearly three years.

Facebook shares went into a freefall on Wednesday (Jul 25) as a stunningly weak financial outlook raised fresh concerns for the social networking giant as it tries to recover from the impact of data protection scandals and investigations.

The average estimate of 15 analysts surveyed by Zacks Investment Research was for earnings of $1.75 per share. It owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram. The company said headcount was 30,275 as of June 30 - an increase of 47 percent year over year.

The Facebook Inc.co-founder, chairman and chief executive officer is set to see his wealth slide to sixth place from third on the Bloomberg Billionaires Index after the company's shares lost of 20 percent their value in after-hours trading today, as the stock plunged following disappointing results.

Wehner said the "deceleration", as he termed it, is "a combination of factors", including the rising USA dollar; what Wehner called the company's newfound "focus on growing engaging new experiences like Stories and promoting of those; giving greater controls to users of the service people who use service for privacy".

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