Facebook privacy problems weigh on stocks as inventory declines

announced slower user growth on Wednesday, underperformed badysts' expectations and increased data backup spending, which reduced its profit margin in the second quarter and reduced its share price. 7%.

The company warned investors to expect a sharp increase in costs because of efforts to address concerns about mismanagement of users' privacy and to better monitor what users are posting. Total spending in the second quarter jumped to $ 7.4 billion, up 50% from last year.

Growth of new users slowed down with Facebook adding 11% of daily and monthly active users to Facebook. A data privacy scandal involving political badyst firm Cambridge Analytica and misinformation about WhatsApp contributing to crowd killings in India has added pressure to Facebook to rebadess how its services are maintaining security and decorum.

The Cambridge Analytica scandal sparked several apologies from general manager Mark Zuckerberg and sparked calls for users to desert Facebook, which has experienced strong growth since its launch as a public company in 2012. [19659003] The Facebook business figure has grown at its slowest pace in almost three years. Sales increased 14% to $ 13.2 billion in the second quarter compared to $ 9.3 billion a year ago.

Facebook shares, which rose about 23% this year, dropped 7% to $ 201.40 after the bell. The company posted a profit of $ 5.1 billion, or $ 1.74 per share, compared to an average of $ 5.1 billion and $ 1.72 per share among Thomson Reuters research

margin from 47% a year ago. The daily growth of users of Facebook's namesake service declined in six quarters in a row, bringing it to 1.47 billion users in the second quarter compared to 1.23 billion at the end of 2016, when it has was mingled with political problems

monthly users of 600 million by the end of 2016, while the two messaging applications of Facebook, Messenger and WhatsApp each reported more than a billion monthly users. According to the EMarketer research firm, Instagram is expected to account for 18% of Facebook 's business figure this year and 23% next year.

Nearly all services have been the subject of further examination since January 2017. Linked to the Russian government had sown the content on the platform to shake up the 2016 US presidential election

The new General Data Protection Regulation in the European Union has imposed several changes to Facebook's privacy requirements and registration process. According to badysts, the law has helped the company lose 3 million daily users in the EU during the second quarter, the first time that it has experienced such a decline .

The threat of further setbacks remains a concern, badysts say.

Facebook suffered a blow to China on Wednesday when regulators withdrew their approval from a business innovation center to support local startups, the New York Times reported on Wednesday citing a person familiar with the case. Facebook and Instagram are as good as ever. The advertising systems on WhatsApp and Messenger remain in the testing phase.

Cowen & Co badysts found that 37% of surveyed ad buyers increased their spending on Instagram in the first half of this year.

The bulk of online advertising budgets tend to flock to the services with the most data on their users and the largest number of users in terms of age. This has allowed Facebook to become the leader of the Google search engine and the YouTube video service of Alphabet Inc. .

(Reportage of Munsif Vengattil to Bengaluru and Dave Paresh in San Francisco, edited by Patrick Graham and Lisa Shumaker)

(This story was not edited by the staff of Business Standard and is generated automatically from a syndicated feed.)