Facebook Shares Plummet After Missing User, Revenue Targets

Prime Minister Malcolm Turnbull would

Mark Zuckerberg could certainly use an asbestos suit.

The results, announced after markets closed, sent Facebook's shares plunging 24% in extended trading. The company held a almost $140 billion lead on Berkshire Hathaway, the sixth largest, at the end of trading on Wednesday. Fourteen analysts surveyed by Zacks Investment Research expected $13.4 billion.

The earnings call that cast serious doubt about Facebook Inc.'s seemingly unstoppable growth started normally enough. And the company told Wall Street the numbers won't get any better this year.

But the company's ad growth engine contended with disruptions in its most lucrative markets. "It just seems like the magnitude is beyond anything we've seen". It was the first full financial report since Facebook became embroiled in the Cambridge Analytica scandal in March. Eastern time by saying the companyhad "a solid quarter".

Only months after a data privacy scandal, Facebook is seeing fewer frequent users than it expected, according to CBS News. And the company was bombarded by public criticism over its content policies, especially in countries such as Myanmar and Sri Lanka where misinformation has led to violence. And it continued to suffer fallout from investigations into Russian manipulation of the platform during the 2016 USA presidential election.

The number of monthly users - a key indicator of Facebook's popularity - rose slightly, to 2.23 billion from 2.2 billion last quarter.

The company reported net income of US$5.11 billion, or US$1.74 a share, compared with analysts' average estimate of US$1.71 a share, according to data compiled by Bloomberg. The company's user base flatlined in its biggest market, the USA and Canada, at 185 million daily users, while declining 1% in Europe to 279 million daily users. Its total user count represents an 11 percent increase over the year-ago period.

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Facebook's daily- and monthly- active user figures were all below analysts' predictions. Analysts projected $13.3 billion. Facebook's results prompted selling in other Nasdaq listings, including media and advertising rivals Amazon.com Inc, Netflix Inc and Alphabet Inc.

Facebook warned that a slowdown in revenue growth will continue through the second half of 2018, with expenses soaring 50% to 60% year over year.

Facebook's founder is the media company's largest shareholder, with 12.8% of its shares outstanding. In Europe, Facebook had to respond to new privacy rules. The company owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram.

One app that received a special shout-out from Zuckerberg on Wednesday's earnings call: Instagram.

Zuckerberg said Wednesday that he was hopeful Facebook would be able to limit disinformation and fake accounts, and that the company was able to do so in elections this year in France, Mexico and Germany.

Before the results were announced, Facebook's shares had closed in NY at $217.50, a record high, and had gained 23% this year.

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