Facebook revenue and user growth fall short of estimates as scandals hit

Facebook reported earnings

Facebook reported earnings

This was up 11% on June 2017, the slowest growth in more than two years.

The company did beat on earnings, which rose 32% to $1.74 per share against an expected $1.72.

It was the company's first full quarter following the Cambridge Analytica privacy scandal.

"Our community and business continue to grow quickly".

The company's user growth fell short of expectations in the same quarter that Chief Executive Officer Mark Zuckerberg testified for 10 hours in U.S. Congress on data privacy issues. Total expenses in the second quarter surged to $7.4 billion, up 50 per cent compared with a year ago.

Daily active users reached 1.47 billion, and once again, these numbers could haunt Facebook (NASDAQ:FB) as growth reached a low 1.44 percent compared to Q1's 3.42 percent.

Expenses are expected to grow 50 per cent to 60 per cent compared with previous year as the company invests in security, marketing and content acquisition, he said.

Facebook faced a tougher climate in Europe since the new General Data Protection Regulation took effect at the end of May.

In February, the research firm eMarketer estimated that the number of Facebook users under the age of 25 would fall by about 2 million this year.

Facebook shares fall as user growth slows

Revenue in the second quarter totaled $13.23 billion, shy of the $13.33 billion analysts expected, raising worries that the political and social backlash against the company is affecting its bottom line.

According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at the social network and will generate $8.06 billion in worldwide ad revenue this year.

"We did see a decline in monthly actives in Europe, down by about 1 million people as a result", Zuckerberg said on conference call.

Zuckerberg also revealed a new metric: 2.5 billion people use at least one of Facebook's apps - Facebook, Instagram, WhatsApp or Messenger - each month.

Almost all social media services have received greater scrutiny since United States intelligence agencies in January 2017 revealed that organisations tied to the Russian government had seeded content on the platform to shake up the 2016 USA presidential election.

The threat of additional privacy regulatory setbacks remains a concern, according to analysts.

Cowen & Co analysts found 37 per cent of ad buyers they surveyed increased spending on Instagram in the first half of this year.

"After a key 1Q earnings test in April which Facebook performed well while passing the regulatory hearings in both United States and Europe with flying colors, now the focus for the Street is around 2Q as another "pivotal barometer" this week to gauge any fundamental damage (advertising, MAU growth) post the Cambridge situation and News Feed overhaul moves".

Paul Ryan Dismisses President Trump's Security Clearance Revocation Threat As 'Trolling'
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