Facebook faced a day of reckoning as its shares plunged today in the company's worst trading day since going public in 2012.
Facebook now employs 30,275 people - an increase of 47 per cent year-over-year. The social media company posted revenue of $13.2 billion in the period, also short of Wall Street estimates.
The social media platform's second quarter earnings report showed it had lost approximately a million monthly users and 3 million daily users in Europe, with no user growth in the US.
Investors were more than a little put out by Facebook execs saying they expect revenue growth to slow as they focus greater attention on user privacy. Its shares also fell off the cliff in March in the wake of the Cambridge Analytica scandal.
Analysts said that a confluence of factors explained Wall Street's recoil: the lower-than-expected revenue guidance; slimmer margins; and the reverberations of the Cambridge Analytica scandal, in which the data consultancy affiliated with the Trump campaign inappropriately siphoned the private data of tens of millions of Facebook users.
Facebook growth was already slowing in Europe, and the new regulations may have added to that, said analyst Daniel Ives of GBH Tech Research. But the shedding is still notable because Facebook, until now, has only ever experienced growth in users quarter-to-quarter. The share price was on its way to the biggest single-day drop in the company's history. Profit was up 31 percent in the second quarter at $5.1 billion; revenues rose 42 percent to $13.2 billion, slightly below most forecasts. Facebook revenue is still growing at a rate double that of Twitter Inc.cade ago, nearly no one could have imagined that Facebook would have more than 2 billion users, much less that its family of apps - Instagram, WhatsApp and Messenger - would also count members in the billions.
Facebook has largely saturated in the USA and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users.
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. The Stories format is showing promise, and Facebook still has strong monetization potential across several areas, like IGTV - where it hasn't even really started yet.
"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.