Facebook market value plunges by almost $150B

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After-hours trade saw Facebook shares plunge by some 21 per cent, wiping out an estimated US$130 billion in market value if the slump is confirmed at Thursday's market opening.

Facebook Inc fell short of analysts' estimates for monthly active users on Wednesday and reported lower-than-expected quarterly revenue, months after the social network became embroiled in a data scandal affecting millions of users.

Through scandal and turmoil, Facebook had taken on an air of invincibility, with its user base continuing to grow and ad dollars fueling its steadily rising stock price.

Sales in the second quarter grew 42 percent, its slowest pace in almost three years, to $13.2 billion compared with $9.3 billion a year ago.

Facebook reported $5.1 billion in profit, or $1.74 per share, compared with the average estimates of $5.1 billion and $1.72 per share among research gathered by Thomson Reuters.

CFO Wehner attributed the slowing growth to currency fluctuations, as well as the company's focus on "growing new experiences such as stories" and "giving people who use the services more choice around privacy". Analysts were expecting 2.25 billion, according to FactSet.

Facebook suffered a blow in China on Wednesday when regulators there withdrew their approval of a company innovation hub to support local startups, the New York Times reported on Wednesday, citing a person familiar with the matter.

Facebook also missed the revenue projections of most analysts for the second quarter.

Facebook shares fall as user growth slows

The social media company has contended for years with criticism about its content policies, its failure to safeguard private data and its changing rules for advertisers. User growth - both on a monthly and daily basis - was flat in the USA and the rest of North America, while it declined slightly in Europe. Stifel analyst Scott Devitt raised his price to $242 from $202, also on the premise of Facebook's strong digital advertising business.

While privacy was an issue in Europe, politics played a role in North America, which is the company's most lucrative advertising market.

The social network beat the predicted $1.72 earnings per share, reporting $1.74. It owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram. There are now 2.5 billion people who used at least one of Facebook's apps in June, including Instagram, WhatsApp and Facebook. "We think that's the right thing to do for the business", he said.

Facebook has said it will increase spending to make investments in video content, and on new bets like artificial intelligence and virtual reality.

Facebook's headcount increased 47% year-on-year, to 30,275 as of June 30, 2018.

Despite the rocky quarter, Facebook shares had hit an all-time high before Wednesday's earnings report and its quarterly revenue was still up 42 percent from this time past year. But once Wehner revealed the slow future revenue growth expectations, the stock fell further.

Executives warned that revenue growth would slow and expenses would rise.

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