Zuckerberg Loses $16.8 Billion in a Snap as Facebook Plunges

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Facebook on Wednesday reported second-quarter sales and user growth that fell short of analysts' projections.

The company said monthly active users rose to 2.23 billion, falling short of a consensus estimate of 2.25 billion from Thomson Reuters I/B/E/S.

Facebook shares have increased 23 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 6.5 percent.

Facebook's first financial stumble in three years followed a quarter in which data-privacy issues came under harsh scrutiny, with chief executive officer Mark Zuckerberg testifying before US Congress for hours on the company's missteps.

Total expenses in the second quarter surged to $7.4 billion, up 50 percent compared with a year ago.

Daily active users reached 1.47 billion, and once again, these numbers could haunt Facebook (NASDAQ:FB) as growth reached a low 1.44 percent compared to Q1's 3.42 percent.

Analysts had estimated a profit of US$1.72 per share, on revenue of US$13.36 billion.

Ross Gerber, an analyst at Gerber Kawasaki, said the latest figures suggest that the tide may be turning for Facebook and other social networks.

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"We expect our revenue growth rates to decline by high single-digit per centages from prior quarters sequentially in both Q3 and Q4", Wehner said on the call.

But the number of people who use the network every day, representing Facebook's most devoted users, remained flat in the United States at 185 million. The company 's shares fell by over 20 percent as it announced its slowest ever growth rate which in turn raised concerns that its growth in terms of revenue is likely to decelerate. The company's user base was unchanged in its biggest market, the USA and Canada, at 185 million daily users, while declining in Europe to 279 million daily users. "This is a clear inflection point for Zuckerberg & Co.as the company's advertising fortress and MAU metrics still look "well intact" despite the massive potential headwinds caused by Cambridge and the overall privacy worries (GDPR) in Europe although challenges remain".

According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at the social network and will generate US$8.06 billion in worldwide ad revenue this year.

Facebook has had a bruising few months, from ongoing fallout from the spread of Russian propaganda to the aftermath of the Cambridge Analytica scandal, and fierce controversy over whether fake news and disinformation should be allowed on the site.

Still, Zuckerberg assured investors that Facebook continues to see growth on its core platform, as well as its other properties, which include Instagram, WhatsApp and Messenger.

About 2.5 billion people use at least one of the company's apps each month, founder Zuckerberg said.

Facebook forecast similar increases for the second half of the year, also citing spending on video content and marketing.

Analyst Ross Sandler with Barclays asked if revenue growth was set to drop to "around 20% by the fourth quarter of this year".

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