Facebook loses $120 billion in value after poor Q2 earnings

It marks the company’s biggest stock market drop ever.

Facebook shares took a historic plunge on Thursday, losing about $120 billion in market value after the company reported slowing sales growth.

The dive followed Facebook’s release of its second-quarter earnings report, which didn’t live up to analysts’ estimates, despite showing 42 percent revenue growth compared to the same period last year. It was the company’s biggest stock market drop ever.

On a phone with analysts on Wednesday, Facebook Chief Financial Officer David Wehner said that the company would continue to see declines in sales growth throughout the year, news that prompted shares to drop 7 percent in after-hours trading, and about 20 percent by Thursday morning.

“Our total revenue-growth rates will continue to decelerate in the second half of 2018, and we expect our revenue-growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4,” he said on the conference call.

Shares of other tech stocks, like Twitter and Snap, took a relatively small hit after the news.

This week’s earnings report was the first since Facebook’s Cambridge Analytica scandal, an event that could explain why Facebook is currently seeing its slowest growth rate ever, with 2.23 billion people logging in at least once a month in June, below the expected 2.25 billion.

“It turns out there is indeed a direct correlation between data privacy scandals and daily active users on Facebook,” Venkat Ramasamy, chief operating officer of FileCloud, told U.S. News & World Report.

“The stock has had an epic run since March, so short-term-minded investors were ripe to sell off Facebook once a hint of a less than perfect quarter turned into a reality. Less time on Facebook means slower top-line revenue that had driven the stock to recurring all-time highs.”

In the second quarter, daily usage remained mostly flat at 185 million daily users in the U.S. and Canada. However, the company saw a decline in daily users in Europe, which is hitting the company with new data protection regulations that can be expected to have a “modest impact” on growth, Facebook officials said.

“We did see a decline in monthly actives in Europe, down by about 1 million,” Facebook CEO Mark Zuckerberg said on the call.

Nevertheless, Facebook’s daily active users increased by 11 percent on a year-over-year basis, and the company was sure to tout the fact that some 2.5 billion people used at least one of Facebook’s apps, including Instagram and WhatsApp, in June.

“We believe this number better reflects the size of our community,” Wehner said.

A dark matter hurricane is crashing into Earth

Giving our solar system a "slap in the face."

Surprising Science
  • A stream of galactic debris is hurtling at us, pulling dark matter along with it
  • It's traveling so quickly it's been described as a hurricane of dark matter
  • Scientists are excited to set their particle detectors at the onslffaught
Keep reading Show less

Science confirms: Earth has more than one 'moon'

Two massive clouds of dust in orbit around the Earth have been discussed for years and finally proven to exist.

J. Sliz-Balogh, A. Barta and G. Horvath
Surprising Science
  • Hungarian astronomers have proven the existence of two "pseudo-satellites" in orbit around the earth.
  • These dust clouds were first discovered in the sixties, but are so difficult to spot that scientists have debated their existence since then.
  • The findings may be used to decide where to put satellites in the future and will have to be considered when interplanetary space missions are undertaken.
Keep reading Show less

New study reveals what time we burn the most calories

Once again, our circadian rhythm points the way.

Photo: Victor Freitas / Unsplash
Surprising Science
  • Seven individuals were locked inside a windowless, internetless room for 37 days.
  • While at rest, they burned 130 more calories at 5 p.m. than at 5 a.m.
  • Morning time again shown not to be the best time to eat.
Keep reading Show less