The value of Facebook’s shares fell over 20 percent yesterday within a few hours after the announcement of quarterly results.
The results indicate that Facebook is experiencing the slowest growth in its history and there are signs that revenue growth will rapidly decline, writes Facebook.
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Before the announcement of quarterly data, the share price was $217.50, which was a record, but after the announcement of the results, it fell to $172. This amounts to a total of $123 billion less in market capitalization, or, prosaically speaking, Facebook lost more in two hours than most other companies are worth.
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The reasons for the decline are as follows:
- The weakest growth in the number of users – in the second quarter, the monthly number of users grew by only 1.54 percent, compared to 3.14 in the previous quarter.
- The monthly number of users in Europe has fallen, which is the first time in history, from 377 million to 376 million. In the US and Canada, the number remained at 241 million.
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- Facebook’s revenues grew by 42 percent in the last quarter, compared to the same quarter last year, but revenues are expected to start declining by nearly 10 percent per quarter in the foreseeable future.
- In the second quarter, the European GDPR came into effect, which will make it more difficult for Facebook to target ads and display content to users.
- It is also estimated that the transition from feeds to stories for advertisers will take longer than for users, possibly even years.
