Facebook in shares plunge after rare miss on revenue
$17bn blow to Zuckerberg to see him slip down the wealth rankings to only sixth richest on planet
FACEBOOK founder Mark Zuckerberg is set to lose his spot as the third richest person in the world, after the Silicon Valley technology giant posted a rare miss on revenue and user numbers, as it suffered the impact of a string of scandals and the introduction of tough new European data privacy rules.
Facebook shares fell as much as 25pc last night in after-hours trade. If the drop is reflected in regular trading today, it would be the biggest one-day fall ever recorded by Facebook, and could wipe around $16.8bn (£12.7bn) from Mr Zuckerberg’s fortune. He had just recently overtaken Warren Buffett as the third richest person, but would slip back down to sixth place.
Facebook’s revenue came in at $13.23bn for the three months to the end of June, up from $9.2bn a year earlier, but down on analyst forecasts for $13.36bn. Its operating margins slipped to 44pc from 47pc, although earnings per share was $1.74, against forecasts of $1.72. Investors were further disappointed during the company’s earnings call, when Facebook provided guidance for the coming quarters, and said revenue growth was likely to continue to slow during the rest of the year and expense growth would outstrip revenue growth in 2019.
“Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high singledigit percentages from prior quarters sequentially in both Q3 and Q4,” said CFO David Wehner. He added that expenses are likely to increase 50pc to 60pc compared with last year as the company spends more on hiring thousands of content moderators to stop the spread of violent or extremist content, security and marketing.
Mr Zuckerberg expressed optimism about the future. “We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect,” he said. There had been some concern about user growth levels ahead of the results, particularly in Europe, where industry experts had warned over the effect of the new General Data Protection Regulation (GDPR) which had meant Facebook was required to ask users whether they wanted to “opt-in” to its data policies or stop using the site.
Although monthly average users ticked up 11pc year on year across the site to 2.23bn, this was the slowest growth ever recorded in this metric, and was also down on analyst forecasts.
User numbers in Europe slipped over the three months to 376m from 377m. Facebook said the decline was purely due to GDPR and not engagement trends.
Mr Wehner played down the impact of GDPR, which he said had not had a significant hit on Facebook’s advertising revenue in the period, although said advertisers were still adapting to the changes. “We do think that there will be some modest impact...on revenue growth” going forward, he added.
The results, which mark the first time Facebook has missed revenue expectations since 2015, come as the firm has been grappling with a string of crises, including the scandal over the misuse of personal data gleaned from the platform by Cambridge Analytica.