Facebook market value plunges by almost $150B

Virginia Carson
July 26, 2018

The company had cautioned investors to expect a big jump in costs because of efforts to address concerns about poor handling of users' privacy and to better monitor what users post.

Adding fuel to the fire, Facebook expects total revenue growth to decelerate in the second half of 2018, and revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4. The company held a almost $140 billion lead on Berkshire Hathaway, the sixth largest, at the end of trading on Wednesday. Fourteen analysts surveyed by Zacks expected $13.43 billion.

Second-quarter revenue and average daily visitors fell short of analysts' estimates, according to a statement from the Menlo Park, California-based company. But the revenue of $13.2 billion missed Wall Street estimates of $13.4 billion. The company is grappling with new data laws in Europe, criticism over its content policies and privacy issues.

FACEBOOK HAS BLED one million active monthly users since the General Data Protection Regulation (GDPR) came into effect.

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However, as usual, Wall Street analysts come to the defense of Facebook stock on any pullback whatsoever. Facebook's results prompted selling in other Nasdaq listings, including media and advertising rivals Amazon.com Inc, Netflix Inc and Alphabet Inc.

Net income attributable to Facebook shareholders rose to US$5.11 billion, or US$1.74 per share, in the second quarter ended June 30 from US$3.89 billion, or US$1.32 per share, a year earlier.

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. The company's user numbers also came below expectations, with the growth in monthly users stalled in the United States and down slightly in Europe. Facebook has largely saturated in the U.S. and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.

All of those problems are hitting amid a harsh truth for the company: Facebook, the social network with 2.23 billion active monthly users, can't grow forever.

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Instagram has grown to 1 billion monthly users from 600 million in late 2016, while Facebook's two messaging apps, Messenger and WhatsApp have each reported well over 1 billion monthly users.

Zuckerberg said Wednesday that he was hopeful Facebook would be able to limit disinformation and fake accounts, and that the company was able to do so in elections this year in France, Mexico and Germany.

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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