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B&T > Media > Facebook Shares Get Hammered For Slightly Weaker Than Expected Results
Media

Facebook Shares Get Hammered For Slightly Weaker Than Expected Results

David Hovenden
Published on: 26th July 2018 at 9:58 AM
David Hovenden
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3 Min Read
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On the day Nine and Fairfax announced plans to merge, Facebook shares have face-planted dropping more than 20 per cent after only slightly missing revenue and user growth targets.

Despite its executives warning of the impending slow down for the best part of a year, investors dumped Facebook shares, as the first signs its recent troubles seemed to be coming home to roost.

Facebook recorded sales below analyst models. The company’s top line was $US13.04 billion, weaker than $US13.34 billion analysts expected. Facebook also missed its user growth expectations: The company reported 1.47 billion daily active users, while Wall Street expected 1.49 billion; it logged 2.23 billion monthly active users, as analysts expected 2.25 billion.

During Facebook’s call with analysts, the company’s chief financial officer, David Wehner, indicated that Facebook’s privacy scandals, coupled with other “headwinds” it’s facing, would likely continue to have a “negative impact on revenue growth” in the coming quarters.

“We expect our revenue growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4,” Wehner added.

For the first time in 11 quarters, Facebook missed analysts’ revenue expectations, which had it posting $13.3 billion for the quarter, according to analysts surveyed by FactSet. Mobile advertising revenue as a percentage of total revenue grew from 87 per cent in the same quarter last year to a staggering 91 per cent.

“So far the fundamental damage to the Facebook platform has been ‘very contained’ in our opinion and is generally better than feared from the white knuckle period a few months ago,” Daniel Ives, an analyst at GBH Insights, wrote in a note to investors after the earnings posted, but before the call, referring to the Cambridge Analytica scandal. Ives described Facebook’s quarter as “respectable,” in contrast to its past record-breaking results.

Facebook has been on a global charm offensive since the Cambridge Analytica scandal splashing cash across old media in the form of advertising as well as employing a large slab of its promised 20,000 new employees to specifically deal with the ongoing fake news problem on the platform.

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TAGGED: Cambridge Analytica, Facebook
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David Hovenden
By David Hovenden
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David Hovenden is one of the co-founders of The Misfits Media Company and is B&T's editor-in-chief. He has been writing about advertising, marketing and media for more than 15 years. At the same time, he has also written for B&T's sister publication Travel Weekly on all matters travel related. Through this publication he can claim to have stepped foot on every continent in the world (now claimed to be eight, if you accept NZ is its own continent). He has also covered the business of law when he was editor-in-chief and publisher of Lawyer Weekly. Human Resources when he worked for that eponymously named title and a plethora of business and technology publications including, but not limited to PC Week, Australian Personal Computer, Web Week, Internet World, Factory Equipment News, Architecture Today and Building Product News. In his spare time David enjoys fishing, kayaking, fine dining and spending time with his family.

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