David Wehner, Facebook's chief financial officer, made a series of bombshell announcements yesterday when he warned markets the revenue slowdown will continue for some time. At the current after hours prices and given its market cap at the close Wednesday, Facebook is poised to lose more than $123 billion in market value.
Facebook itself could be set for its worst day in six years as a public company as its stock dipped 20.4 percent to $173.20 in premarket trading.
After the earnings report, executives worked to explain the potential of Facebook's other properties, not just the main social network, to fuel growth.
Facebook had cautioned investors to expect a big jump in second-quarter costs because of efforts to address concerns about poor handling of users' privacy and to better monitor what users post. Overall, average daily users increased 11% from the period a year earlier.
The company warned its investors that a huge financial injection would be required to buttress the business to address the controversies it's now facing, with revenue growth expected "to decline by high single-digit percentages from prior quarters". "It's the F in FAANG, but what's to say that, 10 years from now, Facebook isn't the next Myspace and something else has taken its place?"
He cited currency fluctuations and a shift in usage to features where Facebook shows less advertising or charges less due to lower demand.
Read the full story at Fox News. "And it reflects that many people use more than one of our services", he said.
Facebook's shares collapsed by 18% on Thursday when the stock market opened in NY, a day after the Silicon Valley company revealed that 3 million users in Europe have abandoned the social network since the Observer revealed the Cambridge Analytica breach of 87m Facebook profiles and the introduction of strict European Union data protection legislation.
Facebook's margin fell to 44 percent in the second quarter from 47 percent a year ago as it spent heavily on security and initiatives to convince users the company was protecting their privacy.
As it stands, Facebook still boasts 2.23 billion users, which make up nearly a third of the entire population of Earth. Commercialisation of those apps is nascent.
Facebook has faced dozens of lawsuits over its handling of user data in a scandal also concerning the United Kingdom firm Cambridge Analytica.
Now we have real-life advertising from Facebook saying it's concerned, and looking after our privacy.