Facebook hammered as user growth cools

Facebook hammered as user growth cools

Facebook hammered as user growth cools

Facebook's stock value crashed as trading opened, with share prices falling by around 18% after a hard second-quarter for the social media giants. Traders are bracing for a decline in tech stocks when the markets open Thursday.

Some shareholders are saying Zuckerberg has gripped too much power at the company.

That "bombshell", as one analyst termed it, played into concerns on Wall Street that Facebook's model could be under threat after a year that has been dominated by efforts to head off concerns over privacy and its role in global news flow.

The report was a relief to investors in the United States technology sector, still reeling from a profit warning by Facebook Inc Wednesday that plunged its stock 19 percent.

The Facebook founder still owns a 13 percent stake in the company, but the slump in share price saw more than $12bn wiped from his net worth in just 24 hours. "We're starting to see that this quarter", he said.

Facebook also said it expects slower user growth, partly due to the effect of the data privacy scandals.

"With or without privacy issues, investors are scared that Facebook's interactions, particularly with those under 25, are falling", Sheehan said.

Facebook reported its user base was still growing but not as fast as some expected.

The firm said it had 2.23 billion monthly active users at the end of June, up 11% on June 2017, marking the slowest growth in more than two years.

The revenue guidance from the company was "unprecedented", said Gene Munster, an analyst at Loup Ventures, in a note to investors.


Ben Bajarin, an analyst at Creative Strategies, calls this "new territory" for Facebook.

As for Facebook, it actually made money in the quarter, just not enough to appease Wall Street.

Some blame the Cambridge Analytica scandal - that political data company that gained access to 50 million users' information, resulting in Zuckerberg testifying before Congress.

The single biggest loser is Mark Zuckerberg, Facebook's founder and chief executive, who owns almost 17% of the company.

But that staggering statistic wasn't enough to distract investors from the bad news the company had to share: It expects significantly decreased revenue growth rates and operating margins in the years ahead.

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.

Overall, technology giants - Facebook, Apple, Google, Amazon and others - have enjoyed nearly unprecedented growth in revenue and stock price for years.

And in the view of BTIG analyst Rich Greenfield, Facebook is making an investment that will pay off down the road. Doom and gloom for Facebook, it seems.

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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