Facebook stock dives almost 20% on warning of slow revenue growth

Facebook's founder and CEO Mark Zuckerberg speaks at the Viva Tech start-up and technology summit in Paris France

Facebook shares fall as user growth slows

The company said it had 1.47 billion daily users in June, compared with the 1.48 billion average of analysts' estimates compiled by Bloomberg.

Facebook CEO Mark Zuckerberg was in Europe last quarter discussing data policies with lawmakers.

Facebook generated revenue of $13.23 billion during the quarter ending June 30, compared to $9.32 billion during the same quarter a year ago.

The company 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.

The after-hours trading was on lower-than-expected revenue numbers from its second-quarter earnings report.

Facebook generated $13.2 billion in revenue, shy of Wall Street's expected $13.4 billion.

CFO Wehner attributed the slowing growth to currency fluctuations, as well as the company's focus on "growing new experiences such as stories" and "giving people who use the services more choice around privacy".

While Zuckerberg has vowed to address the problems through major changes to its business practices and investments in new resources, analysts that cover the stock have maintained a positive outlook, insisting that it would essentially be business as usual for Facebook's lucrative advertising operations.

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The stock slide began right after Facebook reported second-quarter results after the market closed Wednesday.

The proximate cause was the company's disclosure its revenue rate growth will slow precipitously in the current quarter and the next one.

The firm reported revenue of $13.2bn for the three months to the end of June, up 42% year-on-year.

Facebook said the European privacy rules, called General Data Protection Regulation, or GDPR, did not have a big effect on the quarter's revenue, but also noted that they were only in effect for about a month before the quarter ended. The quarter was also marked by Europe's implementation of strict new data laws, which Facebook said led to fewer daily visitors in that region. So far, WhatsApp doesn't show ads, and its founders Jan Koum and Brian Acton left Facebook amid disagreements over advertising and other issues. In North America, an effort to get all political advertisers to verify their identities may have halted some purchases as the company worked through its broad definition of what's considered "political".

For almost two years, Facebook has appeared bulletproof despite a series of scandals about the misuse of its giant social network.

Facebook's operating margin fell to 44 per cent in the second quarter from 47 per cent a year ago.

Facebook's shares had earlier closed in NY at US$217.50, a record high, and had gained 23 per cent this year. 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.

He added that Facebook has "a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter".

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