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.
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Research by neuroscientists at MIT's Picower Institute for Learning and Memory helps explain how the brain regulates arousal.
The big day has come: You are taking your road test to get your driver's license. As you start your mom's car with a stern-faced evaluator in the passenger seat, you know you'll need to be alert but not so excited that you make mistakes. Even if you are simultaneously sleep-deprived and full of nervous energy, you need your brain to moderate your level of arousal so that you do your best.
A disturbing interview given by a KGB defector in 1984 describes America of today and outlines four stages of mass brainwashing used by the KGB.
- Bezmenov described this process as "a great brainwashing" which has four basic stages.
- The first stage is called "demoralization" which takes from 15 to 20 years to achieve.
- According to the former KGB agent, that is the minimum number of years it takes to re-educate one generation of students that is normally exposed to the ideology of its country.
When these companies compete, in the current system, the people lose.
- When a company reaches the top of the ladder, they typically kick it away so that others cannot climb up on it. The aim? So that another company can't compete.
- When this happens in the pharmaceutical world, certain companies stay at the top of the ladder, through broadly-protected patents, at the cost of everyday people benefitting from increased competition.
- Since companies have worked out how to legally game the system, Amin argues we need to get rid of this "one size fits all" system, which treats product innovation — "tweaks" — the same as product invention.
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