Published: Thu, July 26, 2018
Finance | By Jaime Brady

Putting Mark Zuckerberg's $16.8 billion wipeout into perspective

Putting Mark Zuckerberg's $16.8 billion wipeout into perspective

The company's leaders, including its chief executive, Mark Zuckerberg, added that the trajectory was not likely to improve anytime soon, especially as Facebook spends to improve the privacy and security of users. If that holds through Thursday's close, he will slide to sixth place from third on the Bloomberg Billionaires Index. Fourteen analysts surveyed by Zacks Investment Research expected $13.4 billion.

Growth in new users slowed with Facebook adding 11 percent more daily and monthly active users on the main Facebook app in the second quarter, compared with 13 percent in the first quarter.

Facebook also reported that its user base in Europe had shrunk because of a new privacy law there, marking one of the few times in the social network's history that it has reported a user decline in any region.

"They're talking about currency headwinds, but more we think it's due to slower user growth given GDPR and more focus on privacy", Morningstar analyst Ali Mogharabi said. "We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect", Facebook CEO Mark Zuckerberg said announcing the company's second quarter earnings. And the company told Wall Street the numbers won't get any better this year.

What is your opinion over Facebook's Q2 2018 earnings? The company remains in a dominant position in mobile advertising alongside Alphabet Inc.'s Google.

The shift in Facebook's business fortunes follows a series of crises that began in late 2016 with the revelations that it had become a prime distributor of misinformation.

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Advertising revenue for the quarter was $13.04 billion, missing analyst forecasts of $13.16 billion. Management also warned revenue growth rates would decelerate in Q3 and Q4.

Net income was $5.11 billion, or $1.74 a share, beating analysts' estimate of $1.71 a share. Facebook has largely saturated in the USA and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.

The number of monthly users - a key indicator of Facebook's popularity - rose slightly, to 2.23 billion from 2.2 billion last quarter.

The social network fessed up to the exodus during its second-quarter earnings on Wednesday, admitting that the implementation of GDPR saw it lost a good swathe of European users. It owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram. Together, the entire Facebook suite of products has 2.5 billion unique monthly users, the company disclosed for the first time.

Shares in the technology company and publisher plunged by nearly 25 per cent in late trading after David Wehner, chief financial officer, said that Facebook's revenue growth would decelerate in the second half of the year and expenses would soar in 2019.

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.

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