• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Talk Vietnam

All About Vietnam

  • Home
  • About Us
  • Contact Us
  • Disclaimers
  • DMCA
  • Privacy Policy
  • Submit your story

Facebook shares sink on perfect storm of bad news

July 26, 2018 by e.vnexpress.net

The social network star — which has weathered storms over privacy and data protection — is now looking at cooler growth following a years-long breakneck pace.

Shares in Facebook plummeted 19 percent to close at $176.26 Thursday, wiping out some $100 billion — believed to be the worst single-day evaporation of market value for any company.

The plunge came one day after the firm missed revenue forecasts for the second quarter and warned that growth would be far weaker than previously estimated.

Chief financial officer David Wehner warned Wednesday in an earnings call with analysts that revenue growth had already “decelerated” in the second quarter and would drop “by high single digit percentages” in coming quarters.

At one point during the call, Facebook shares were trading down as much as 24 percent, an unprecedented drop for a large firm.

On the call, Jefferies & Co. analyst Brent Thill said that “many investors are having a hard time reconciling that deceleration… It just seems like the magnitude is beyond anything we’ve seen.”

Facebook said the slowdown will come in part from a new approach to privacy and security, but also appeared to acknowledge the limits of growth in advertising, which accounts for virtually all its revenue.

Brian Sheehan, a Syracuse University professor of communication and advertising, said the weak forecast “made investors nervous about more basic long-term issues” with the huge social network, notably its diminished appeal to younger users.

“With or without privacy issues, investors are scared that Facebook’s interactions, particularly with those under 25, are falling,” Sheehan said.

More humans needed

For the second quarter, profit was up 31 percent at $5.1 billion; revenues rose 42 percent to $13.2 billion, only slightly below most forecasts.

Facebook reported its user base was still growing but not as fast as some expected. Monthly active users rose 11 percent to 2.23 billion — below most estimates of 2.25 billion.

Richard Windsor, a technology analyst who writes the Radio Free Mobile blog, said the new outlook should not be surprising.

“This is a direct result of scale as it becomes increasingly difficult to grow at such high rates when a company hits this size,” Windsor wrote.

Windsor added that Facebook is forced to hire more people to handle tasks such as filtering inappropriate content after discovering the limits of artificial intelligence.

“Weaknesses in AI are forcing (Facebook) to keep hiring humans to do the jobs that the machines are incapable of,” he said.

Brian Wieser at Pivotal Research Group said the company appears to have hit a “wall” on growth in advertising.

In a research note, he said Facebook’s outlook “suggests that while the company is still growing at a fast clip, the days of 30 percent-plus growth are numbered.”

Until Wednesday, Facebook shares had been at record highs as investors seemed to shrug off fears about data protection and probes into the hijacking of private information by the political consultancy Cambridge Analytica.

Chief executive Mark Zuckerberg said Facebook has invested heavily in “safety, security and privacy” after being rocked by concerns of manipulation of the platform to spread misinformation, warning of an “impact” on profitability.

Not so fast

Some analysts however said it was too soon to write off Facebook or its growth prospects, and that the company may have simply been warning of the worst-case scenario.

“The company has a track record of resetting revenue growth and expense expectations only to turn around and exceed those expectations the following quarter,” said Gene Munster of Loup Ventures.

“We suspect Facebook is sticking with its historical playbook and will, in fact, beat these lower numbers.”

Richard Greenfield of BTIG Research said he remained upbeat on Facebook despite the abrupt forecast shift.

“Facebook is actively choosing to make less money, deprioritizing near-term monetization to drive engagement to even higher levels,” Greenfield said in a note to clients.

Greenfield said he could “sense the fear/panic in investors’ voices” after the Facebook analyst call but that he has maintained his outlook.

“Mobile is eating the world and Facebook is a core holding to benefit from that shift,” he said.

RBC Capital Markets analyst Mark Mahaney said the drop creates a rare buying opportunity for Facebook shares.

“Facebook stills owns two of the largest media assets in the world (Facebook and Instagram) and the two largest messaging assets in the world (Messenger and WhatsApp),” Mahaney said in a note to clients, adding that he sees “no material change in marketer views of the attractiveness” of Facebook platforms.

  • Zandra Rhodes refused advice from famous psychic medium aunt - even bad news
  • Coronavirus: Senior media figures warn of COVID-19 'perfect storm' hitting newspapers
  • Worried about your house price? It's not all bad news out there
  • Mum shares what she uses 'extra hole' in sink for - and it's blowing people's minds
  • 'The ship is sinking': Bolsonaro battles to block foul-mouthed cabinet video
  • 100 days later: How did Britain fail so badly in dealing with Covid-19?
  • Death of five surfers in storm shocks Netherlands
  • 'We pray for this bad time to end': the steep cost of lockdown in South Africa
  • Mexico: at least 35 people die in mass bad-alcohol poisoning
  • Facebook buys GIF website Giphy, to integrate it with Instagram
  • Boyfriend is charged with murder a month after his girlfriend’s decomposing body was found in the NYC apartment they shared with his other lover
  • Coronavirus crisis is the perfect time for millions of overweight Brits to get slim, Oxford University scientist says amid warnings obesity can DOUBLE the risk of being hospitalised with COVID-19
  • 'Meet your new speech police': Trump's communications chief slams Facebook over $130M ‘supreme court' that includes professor who liked post comparing POTUS to Hitler, impeachment witness who joked about Barron and ex editor of the Guardian
  • The Anti-vaxxers Are Winning the Battle on Facebook
  • Revealed - Facebook's $130m 'independent supreme court': List of 20 'politically neutral' members includes left-wing luminaries such as ex-Guardian editor Alan Rusbridger and Labour MP Stephen Kinnock's former Danish PM wife
  • Coronavirus news from the Bay Area: May 5-6
  • AMID SUSPECTED HERDSMEN ATTACKS: Storm in Delta over mass transfer of police officers
  • Human rights in Colombia: how bad do things have to get?
  • Bad Bunny Surprise Drops New Album Perfect for Getting Lit in Quarantine
  • All it took was an anchor … how a storm took down half the UK's electricity link to France
Facebook shares sink on perfect storm of bad news have 1032 words, post on e.vnexpress.net at July 26, 2018. This is cached page on Talk Vietnam. If you want remove this page, please contact us.

Filed Under: International Facebook, Mark Zuckerberg, shares, stocks, privacy, security, Facebook shares sink on perfect storm of bad news - VnExpress International, bonik barta share news, metricon at centre of a perfect property storm, bad news thanks, butang share facebook hilang, daily bible verse to share on facebook, facebook tweet share, post facebook instagram comment like share, news 4 storm tracker, news 4 jax storm tracker, news 5 storm tracker, news 6 storm tracker, 7 news storm tracker, news 9 storm tracker, news 9 storm tracker fired, share image facebook, share facebook status, lilly singh how to tell your parents bad news, dutch news storm, share reel to facebook, zuckerberg facebook shares percentage

Primary Sidebar

RSS Recent Stories

  • Prime Minister chairs monthly teleconference with localities
  • Vietnamese university up 97 places in Webometrics ranking
  • Google Doodle honours first female Vietnamese newspaper editor Suong Nguyet Anh
  • US Fed unveils smaller rate hike but signals inflation fight not over
  • Thai economy may grow 4% this year
  • Vietnamese striker Tien Linh nominated for 2022 Asian Golden Ball
  • Vietjet offers flight tickets up to 90% off
  • Coach Park Hang-seo to hold event thanking fans for support
  • Central bank sets rules on transfer of money abroad for sponsorship, assistance purposes
  • Bac Giang opens Tay Yen Tu Spring Festival, Culture – Tourism Week

Sponsored Links

  • UK, Denmark, and Australia Report Highest Daily Covid-19 Cases
  • The best movie scenes of 2021
  • Windows 11’s Default Command Line Catches up to Mac and Linux
  • What Is the Log4j Flaw, and How Does it Affect You?
  • Commander Keen 4: The First and Only Video Game I Loved
Copyright © 2023 Talk Vietnam. Power by Wordpress.
Home - About Us - Contact Us - Disclaimers - DMCA - Privacy Policy - Submit your story