Facebook Stock Decline Is Largest One-Day Drop in U.S. History

28 July, 2018, 19:41 | Author: Lora Ball
  • Facebook shares sink 8% as Q2 revenue and user growth misses analyst estimates

But Amazon shares - which had been feeling the jitters from Facebook shareholders' disappointment - jumped more than 3 per cent to a record high of US$1874 in after-hours trading.

The company said profit was up 31 percent in the second quarter at $5.1 billion as revenues rose 42 percent to $13.2 billion.

In lieu of Facebook's current multi-front crisis, one activist investor filed a proposal demanding that Zuckerberg be replaced as the firm's chairman for "mishandling" the numerous crises beleaguering the company, according to a report by Fortune. The company's quarterly revenue fell slightly short of meeting the expectations of Wall Street analysts.

The Mark Zuckerberg-led social-media titan saw shares drop 19% on Thursday following a disastrous second-quarter earnings report. Not only did the Cambridge Analytica scandal only really affect Facebook users and not those on other Facebook-owned services like Instagram, WhatsApp or Oculus devices, but Facebook has been facing a trickling loss of younger users for years.

Facebook shares have already been through a rollercoaster of ups and downs this year, with the biggest slump coming in April after it emerged data from tens of millions of users had been acquired by Cambridge Analytica.

Facebook's stock took a beating Wednesday - before being utterly pummeled.

Nearly all of Facebook's revenue - $13 billion of the total $13.2 billion - came from online advertising, a sector dominated by the California social network along with Silicon Valley rival Google.

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The figure includes real people, rather than accounts since people can have multiple accounts on a single app, founder and CEO, Mark Zuckerberg said.

This was evident in a 50 per cent rise in costs year-on-year for the quarter.

In a research note, he said Facebook's outlook "suggests that while the company is still growing at a fast clip, the days of 30 percent-plus growth are numbered". But as I've said on past calls, we're investing so much in security that it will significantly impact our profitability. But the shedding is still notable because Facebook, until now, has only ever experienced growth in users quarter-to-quarter. Traders are bracing for a decline in tech stocks when the markets open Thursday.

For Q2, Facebook's daily active users increased 11% year-over-year, to 1.47 billion on average during the month of June.

But Facebook's recent woes appear to be more than just a temporary bump in the road.

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.

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