Wall Street punishes scandal-hit Facebook

Worryingly for Mark Zuckerberg users in the European market fell by 3 million while US numbers were flat

"Many analysts were rather dumbstruck on the conference call, with some stammering a bit as they asked questions trying to get their heads around a decline in revenue-growth that had always been presaged but never actually arrived", Poletti wrote. The social network star - which has weathered storms over privacy and data protection - is now looking at cooler growth following a years-long breakneck pace.

Facebook lost about $120 billion of its value on Thursday, marking the biggest one-day loss in USA market history. Microsoft lost $80 billion one day earlier.

However, that still meant facebook had 2.23 billion monthly active users - nearly a third of the population of the planet - at the end of June, 11 per cent more than it had a year earlier.

Dismal revenue, which initially pulled the stock down almost 9 percent on Thursday, clearly was not the end for wounded investors.

And Facebook warned that revenue growth from emerging markets and the company's Instagram app, which has been less affected by privacy concerns, would not be enough to fix the damage.

Advertisers and brands, he goes on, are still seeing strong ROI from advertising across Facebook and Instagram.

Facebook has faced intense scrutiny over privacy issues and the spread of disinformation or "fake news".

Facebook ad revenue also grew 42 percent year-over-year.

In the near-hour after the release of the earnings report, the stock was down about 8%. Facebook reported its slowest growth rate ever, with 2.23 billion people logging in at least once a month in June, below the 2.25 billion analysts expected.

Wehner gave three different reasons why the company's revenue growth would decline: currency headwinds, greater investments in new kinds of content-sharing, like disappearing videos, and greater user control over privacy - a direct response to criticism the company has fielded.

Facebook shares sink 8% as Q2 revenue and user growth misses analyst estimates

While privacy was an issue in Europe, politics played a role in North America, which is the company's most lucrative advertising market.

"Weaknesses in AI are forcing (Facebook) to keep hiring humans to do the jobs that the machines are incapable of", he said.

The number of daily active users in Europe fell by 3 million people from the first quarter, dropping to 279 million.

Facebook shares fell when the results came out and continued to drop during CEO Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg's earnings call with Wall Street analysts.

"I think many investors are having a hard time reconciling that deceleration", Brent Thill, an analyst at Jefferies LLC, told Facebook executives, asking for a little more clarity on the reasoning.

"We suspect Facebook is sticking with its historical playbook and will, in fact, beat these lower numbers".

"Facebook might have its wings clipped, but it is still a remarkable money-making machine".

Until now, he said, there was a sense that the vast majority of users didn't fully understand Facebook's business.

"Mobile is eating the world and Facebook is a core holding to benefit from that shift", he said.

Facebook has been an omnipresent part of American news for what seems like all of 2018, and rarely with a positive connotation.




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