Facebook Stock Down 9% Following Q2 Revenue Miss, Slowing User Growth


Expenses grew even faster, however, rising 50% to about $7.4bn.

Facebook (NASDAQ:FB) managed to reached 2.23 billion monthly users but these numbers show that growth topped just 1.54 percent, which is much slower than Q1's 3.14 percent around where its growth rate has hovered for many years.

Although Facebook shares were in a slump after the Cambridge Analytica scandal broke earlier this year, the stock had risen sharply and hit record levels this month.

It said it now employed 30,275 people, up 47% from a year ago.

The social media site had a rough hump day as the company was below the mark with its sales and its global daily active users during its second quarter of fiscal 2018, due in part to the slew of data leaks and fake news fiascos that plagued the company during the period.

Zuckerberg has said he did not expect a meaningful impact from the uproar over data hijacked by political consulting firm Cambridge Analytica, but the last quarter's figures suggested some cooling.

Analysts attributed the user growth shortfall largely to European privacy rules that went into effect in May.

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

Facebook reported $5.1 billion in profit, or $1.74 per share, compared with the average estimates of $5.1 billion and $1.72 per share among research gathered by Thomson Reuters.

Daily user growth for Facebook's namesake service has slid in six straight quarters, bringing it to 1.47 billion users in the second quarter from 1.23 billion at the end of 2016 when it became embroiled in political issues. Sales from United States, Canada and Europe fell $75 million in the second quarter compared with a year ago, while revenue from other markets rose $51 million.

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On Wednesday, the company posted earnings per share of $1.74 on revenue of $13.04 billion for the second quarter, while analysts had anticipated gains of $1.72 on revenue of $13.36.

According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at the social network and will generate $8.06 billion in worldwide ad revenue this year.

"It appears that stronger Instagram performance (according to our checks) was not enough to offset some of the core app headwinds", said Colin Sebastian, analyst at Robert W Baird & Co.

Facebook has shown that it can not sail forever forward while facing various storms, including Cambridge Analytica and the Russian government's use of the social media platform to sow divisions amongst Americans during the 2016 presidential campaign.

It's the first time Facebook missed an earnings report since 2015.

Zuckerberg also revealed a new metric: 2.5 billion people use at least one of Facebook's apps - Facebook, Instagram, WhatsApp or Messenger - each month.

The company remains in a dominant position in mobile advertising alongside Alphabet Inc.'s Google.

Facebook has said it will increase spending to make investments in video content, and on new bets like artificial intelligence and virtual reality.

The biggest chunk of online advertising budgets tend to flow to the services with the most data on their users and the broadest set of users in terms of age.