Facebook has experienced the biggest stockmarket crash in history, with shares dropping 20% – or $US124 billion ($168 billion) – during trading on Thursday.
The crash also saw company founder and CEO Mark Zuckerberg lose almost $US16 billion ($21.7 billion) of his personal fortune.
Zuckerberg fell from fourth to eight on the Forbes list of world’s richest people.
It followed disappointing Q2 results for the controversy-plagued social media network.
Growth in active monthly users was only 1.54% – well below the previous quarter’s 3.14%. The $US13.23 billion of revenue was also below the forecasted $US13.36 billion.
And according to Facebook CFO David Wehner, the worst could still be to come.
“Our total revenue growth rates will continue to decelerate in the second half of 2018,” he told analysts.
“And we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both the third and fourth quarters.
“Over the next several years, we would anticipate that our operating margins will trend towards the mid-30s on a percentage basis.”
Facebook’s operating margin was 44% – 3% lower than this time last year.
Cambridge Analytica lingers
“You are not going to over-deliver every year,” Wehner said. “You have to talk about how you are handling problems, how you are capitalising on opportunities and minimising risks.”
And Facebook has had its fair share of problems to handle in recent times.
The privacy scandal involving Cambridge Analytica and the ongoing issue of fake news has left Zuckerberg’s company in damage control.
The two-day grilling from a Senate Committee in April that resulted from the scandal left Zuckerberg and co scrambling to repair public image.
In a document authored by a Facebook board committee, the company spoke of the proceedings, saying “any such inquiries could subject us to substantial fines and costs, divert resources and the attention of management from our business, or adversely affect our business.”
The controversy has also seen Facebook invest heavily into its security capabilities, with Wehner explaining “those investments are in the billions of dollars per year, those will have a negative impact on margins.”
But it is anticipated by Facebook that this investment will be fruitful in the long-run, with the board committee stating the security expenses would “drive significant year-over-year growth.”
The document also highlights that expense growth has exceeded revenue growth, which is expected to continue through 2018 and 2019.
Another area of concern for the social media giant appears to be Europe – where the number of daily active users dropped from 282 million in Q1 to 279 million in the most recent quarter.
This may be due to the European Union’s General Data Protection Regulation, which came into effect on May 25.
“There is decreased engagement with our products, or failure to accept our terms of service, as part of changes that we implemented in connection with the General Data Protection Regulation (GDPR) in Europe,” said the board committee.
The EU has received complaints of Facebook GDPR non-compliance since midnight on 25 May.