Facebook released its earnings for the second quarter, which showed missed expectations and slow user growth. The company posted a stock loss of about one-fifth of its value on Wednesday's quarterly earnings call.
Facebook's share dropped by 7-8 percent immediately after the earnings report was published and gradually the stocks plummeted to a loss of more than 20%, by the time a conference call with the analysts carried on afterward the release of the report. Also, the company's sales were unable to reach up to the heights of its yearly expectations.
Facebook's Second Quarter Earning Report: Expectations and Reality:
According to Market Watch, the company registered a comprehensive net income of $5.12 billion for the quarter, which amounts to $1.74 a share, up from $3.89 billion or $1.32 a share in the year-ago period. However, the social media giant progressed 42 percent year-over-year growth in ad revenue and 11 percent of the year-over-year growth in monthly and daily active users, as per the report of this quarter. But this report is not up to the mark in terms of Facebook's growth expectations according to the market experts.
The Verge quoted that Facebook currently holds roughly 1.47 billion daily users along with 2.23 billion monthly users. But these number still lacks the expected followers' lineup of Facebook in a year-to-year timeline.
Recode also noted that the company seems to lag behind in the U.S. and Canada recently, which were the two major regional markets for the social media giant.
Possible Reasons Behind Facebook's Stock Loss:
While analyzing the poor performance of Facebook in this quarter, experts and market analysts stated that the things are not going well for Facebook's huge online advertising platform, which is one of the most important profit earning areas for the company. The advertising empire of the company seems to struggle a lot recently fighting against the unscrupulous third-party individuals and networks, which are misusing Facebook's privacy policies for their own benefit.
Loss of reputation amidst various scandals is also another reason for Facebook's stock loss. The company faced some serious troubles with the Cambridge Analytica Scandal, which challenged its privacy policies. However, Facebook recovered the bad times with developments for tightening the privacy features.
Facebook administration further warned the investors in this earnings call that the social handle will put more efforts to provide users with greater privacy controls. These measures may also cut short advertising revenue in the future as the ads will be limited and less targeted.
