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Facebook hammered as user growth cools
[SAN FRANCISCO] Facebook shares took a hit Wednesday after the world's biggest social network reported weaker-than-expected user growth in the first full quarter since being rocked by a series of scandals on data privacy.
The company said profit was up 31 per cent in the second quarter at US$5.1 billion as revenues rose 42 per cent to US$13.2 billion.
But shares slumped seven percent in after-hours exchanges after hitting record levels in official trading, with the quarterly report largely weaker than had been expected.
"Our community and business continue to grow quickly. We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect," chief executive Mark Zuckerberg said.
Mr Zuckerberg has said he did not expect a meaningful impact from the uproar over data hijacked by political consulting firm Cambridge Analytica, but the last quarter's figures suggested some cooling.
The key metric of monthly active users rose 11 per cent to 2.23 billion, below most estimates of 2.25 billion, while daily active users grew a weaker-than-expected 11 per cent to 1.47 billion.
Almost all of Facebook's revenue - US$13 billion of the total US$13.2 billion - came from online advertising, a sector dominated by the California social network along with Silicon Valley rival Google.
Although Facebook shares were in a slump after the Cambridge Analytica scandal broke earlier this year, the stock had risen sharply and hit record levels this month.
According to the research firm eMarketer, Facebook is expected to hold an 18 per cent share of the US$273.29 billion worldwide digital ad market, behind Google's 31 per cent.
According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate US$8.06 billion in worldwide ad revenue this year.