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This is a superlative stock. Since its IPO in May 2012, Facebook's share price has increased sixfold, with the stock returning on average to more than 30% a year. The title had just climbed to a new record. Wednesday, Facebook then showed a scary face: The price fell after the quarterly figures of about a quarter. More than $ 120 billion in stock market value has disappeared, the biggest daily loss of Wall Street history.
What happened? Turnover and the number of users did not live up to expectations. At the end of June, Californians had 2.23 billion members. Facebook announced sales of 13.23 billion dollars, with 13.36 billion expected. Growth was 42%, a respectable rate. The real reason why many investors took profits on Wall Street: Chief Mark Zuckerberg and his team warned investors that growth could be more moderate in the coming quarters.
The many negative headlines after the Facebook scandal in the spring, so the concern of Wall Street, now could only the effect. At that time, illegally reevaluated user data evaluated by the now-defunct Cambridge Analytica company had caused worldwide outrage and severely damaged their trust in Facebook.
Perhaps this is why an important indicator has deteriorated: The number of monthly active users in the major US, Canada and Europe markets has disappointed. In the United States and Canada, the number stagnated with 185 million compared to the previous quarter, in Europe, the number of true friends on Facebook even decreased slightly from 282 to 279 million.
More Money for Security
According to Chief Financial Officer Dave Wehner, the European Privacy Directive is one of the reasons why revenue growth in European advertising has slowed more than in other parts of the world. And apparently, new ad formats on the burgeoning Instagram photo platform do not attract as much money as the management hoped for. In the future, Facebook also wants to spend more money for security. This has been discussed since last autumn.
All this will bring down the operating margin. Currently, Facebook still earns 44 cents of operating profit from every dollar of income. In a few years, according to Wehner, the margin will be in the middle range of 30 percent. This and the prospect of slower growth have shocked Wall Street.
Many badysts were once again waiting for galactic results. Nevertheless, Facebook has proven several times since the IPO that it is able to overcome difficulties. After the first scholarship, the price rose, but then collapsed, because users have changed mbadively from the computer to the smartphone. Zuckerberg then mobilized Facebook. The spring data scandal also resulted in a 20% drop in the stock. The paper closed the gap immediately. The fact is that Facebook's business model is one of the best in the world: margins are extremely high and growth is blowing despite its high income base. The stock should also close this gap.
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Image Sources: FLDphotos / istockphoto, BEST-BACKGROUNDS / Shutterstock.com
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