Face­book in­vestors braced for an­other de­cline in Euro­pean users

The Sunday Telegraph - Money & Business - - Business - By James Tit­comb in San Fran­cisco

FACE­BOOK in­vestors are braced for the so­cial net­work to re­port a sec­ond con­sec­u­tive de­cline in Euro­pean users as it shows more ev­i­dence of sat­u­ra­tion in its most prof­itable mar­kets, de­spite world­wide growth.

An­a­lysts at Deutsche Bank pre­dict the ef­fect of new data pro­tec­tion laws and a Septem­ber cy­ber-at­tack that forced it to log mil­lions of peo­ple out of their ac­counts will hit user num­bers in Europe, Face­book’s most lu­cra­tive area out­side North Amer­ica.

In July, Face­book re­vealed the num­ber of Euro­peans log­ging in ev­ery month had fallen by a mil­lion. While a mi­nor de­cline, it was the first drop in monthly us­age in any re­gion. Glob­ally, growth in the last quar­ter was the slow­est ever recorded and the day af­ter the re­sults, $120bn (£94bn) was wiped off Face­book’s mar­ket value, the largest one-day loss by a pub­lic com­pany in his­tory.

It is yet to re­cover and this week’s re­sults will be a cru­cial test of whether July’s drop was a one-off blip or ev­i­dence of a wider malaise. Deutsche Bank an­a­lysts last week down­graded fore­casts for this week’s re­sults, say­ing they were “un­likely to be a pos­i­tive cat­a­lyst” for the com­pany’s share price.

The so­cial-me­dia gi­ant’s prob­lems have con­tin­ued, in­clud­ing a re­cent cy­ber-at­tack in which hack­ers stole the de­tails of 40m cus­tomers.

In late Septem­ber, Face­book logged 90m users out of their ac­counts in or­der to pro­tect them from the at­tack. This may af­fect the com­pany’s daily user num­bers – a key in­di­ca­tor of how loyal users are.

The so­cial net­work is also ex­pected to give a first es­ti­mate of how much it ex­pects to spend next year. In­vest­ments in thou­sands of mod­er­a­tors as well as in server and tele­coms equip­ment have lim­ited profit growth, al­though the com­pany is ex­pected to re­port quar­terly prof­its of $5.2bn, up 11pc on last year.

It comes af­ter so­cial-net­work ri­vals Snapchat and Twit­ter both re­vealed de­clines in user num­bers last week.

Face­book shares are cur­rently trad­ing at their low­est price in more than a year amid a broad sell-off in tech­nol­ogy shares.

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