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The second quarter results were the first sign that a new European law on the protection of privacy and a succession of privacy scandals involving Cambridge Analytica and other developers of intellectual property. applications have somewhat influenced the activities of Facebook. The company also warned that the toll would not be offset by revenue growth from emerging markets and Facebook's Instagram application, which was more immune to privacy concerns.
Facebook's fortunes have shifted in less than two hours as the company announced for the first time a revenue and user growth that missed expectations and issued warnings about growth and future expenses.
The operating profit margin, which fell to 44% in the second quarter from 47% a year ago, will drop in the mid-30s for more than two years, said Finance Director David Wehner.
The collapse of the stock price has erased up to $ 150 billion of market capitalization and erased stock market gains since April, when Facebook announced a surprisingly strong 63% increase in stock market prices. benefits and an increase in users.
If the decline in shares continues Thursday, it would be the largest decline Facebook on a single day, exceeding 12% in July 2012.
Nasdaq futures tumbled 0.85% on Wednesday, suggesting that the Nasdaq Composite Index, which is hugely technological, would fall in open markets on Thursday morning . Facebook's results have prompted sales in other Nasdaq listings, including media and advertising rivals Amazon.com Inc., Netflix Inc. and Alphabet Inc.
"ENTERING A NEW PERIOD"
Facebook had warned investors to wait for a big jump in second-quarter costs because of efforts to address concerns about improper treatment of the user privacy. In the second quarter, total expenditures were $ 7.4 billion, up 50% from last year.
Facebook is planning similar increases for the second half of the year, also citing spending on video content and marketing.
His earnings growth forecasts, however, surprised investors and prompted many questions from financial badysts during a conference call with business executives on Wednesday.
In the second quarter, sales rose 42%, the slowest pace in almost three years, to $ 13.2 billion from $ 9.3 billion a year ago.
Wehner said that quarterly revenue growth would be closer to 30 percent the rest of the year.
He cited currency fluctuations and a shift in the use of features where Facebook shows less advertising or less fees because of declining demand.
The General Data Protection Regulation (GDPR) in the European Union will also result in lower revenues. The new privacy law has imposed several changes to Facebook's privacy requirements and registration process, leading a minority of users to opt for non-personalized advertising, which generally generates less income.
"They are talking about headwinds on currencies, but the more we think this is due to slower user growth given the GDPR and more to privacy protection," said Ali Mogharabi, badyst of Morningstar.
Facebook's daily active users in Europe dropped by 3 million in the new regulation. The global daily growth of users of Facebook's namesake service slid for its sixth consecutive quarter, bringing to nearly 1.5 billion the number of users in the second quarter.
The company said for the first time that more than 2.5 billion users interact with at least one of its apps each month, but badysts said that many of them were spending more than time with Messenger, WhatsApp and Instagram. The commercialization of these applications is nascent.
Emerging market incomes have not taken over. Sales in the United States, Canada and Europe decreased by $ 75 million in the second quarter compared to last year, while revenues in other markets increased by $ 51 million.
Gene Munster, a venture capital investor with Wolf Ventures, said in an email that Facebook "is entering a new period" where declining user growth will result in slower revenue growth.
He added that Facebook had "a roadmap for resetting revenue growth and spending expectations only to reverse and exceed those expectations the following quarter."
Facebook reported earnings of $ 5.1 billion, or $ 1.74 per share, compared to average estimates of $ 5.1 billion and $ 1.72 per share among Thomson Reuters research .
According to badysts, the threat of additional retreats in the area of privacy protection remains a concern.
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 close to the file.
Misinformation on WhatsApp contributing to mbad killings in India has added pressure to Facebook to re-evaluate how its services maintain security and decorum.
Almost all social media services have been the subject of closer scrutiny since US intelligence agencies revealed in January 2017 that organizations linked to the Russian government had sown content on the Internet. platform to shake up the 2016 US presidential election.
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