Facebook on Pace for Biggest Loss Ever After Disastrous Earnings Call

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Shares of Facebook Inc. (FB) are reporting eye-popping losses Thursday after the social media giant’s second-quarter earnings call raised red flags about its moneymaking prowess.

Facebook Earnings Call Rattles Investors

Concerns about revenue growth, monetizing Instagram and the impact of new privacy laws have rattled investor confidence in Facebook. Those fears took all but 20 minutes to materialize Wednesday afternoon in an earnings call that failed to allay investors’ concern over a litany of issues facing the company.

For starters, Chief Financial Officer Dave Wehner said advertising revenue was down more in Europe than any other region partly because of new privacy legislation that came into effect in May.

Wehner’s second bombshell was that overall revenue growth wasn’t just slowing in the second quarter but would continue to do so for the remainder of the year. Exchange-rate risks, new privacy options and disappointing ad revenues for Instagram Stories were largely to blame.

The company also confirmed weak user trends in some of its core markets, including the U.S. and Canada. Daily active users in both countries came in at 185 million, virtually unchanged from the previous quarter. Daily users in Europe fell to 279 million from 282 million in the previous quarter.

Of course, on paper, Facebook’s earnings results appear stellar. For the quarter, per-share earnings jumped 32% to $1.72 on revenues of $13.23 billion. However, analysts had forecast revenues of $13.36 billion. The last time Facebook missed analysts estimates for revenue was in Q1 2015.

Wrong Type of History

As Business Insider reports, Facebook’s Thursday open puts the social media giant on track for the worst single-day loss in stock-market history. Share prices plunged a whopping 19%, erasing $115 billion in market capitalization.

The bloodbath began after hours with share prices plunging as much as 24%. Facebook traded as low as $174.78 a share on Thursday.

Facebook’s precipitous drop is likely to drag other tech shares along for the ride. Apple Inc. (AAPL), Amazon (AMZN) and Netflix (NFLX) were all down more than 1.5% overnight. The Nasdaq Composite Index opened firmly in the red on Thursday and was down by as much as 1.2% in regular hours.

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Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi