Facebook’s stock plunged Wednesday following the company’s second-quarter earnings report.
The company’s revenue and subscriber growth missed Wall Street’s expectations, and then company officials warned of slowing growth ahead.
The market capitalization of the social-networking giant was down by as much as $148 billion before recovering a bit later in the day.
Immediately following the company’s disappointing earnings report — in which it reported worse-than-expected user growth and revenue — investors sent its shares down more than 10%. Then, during the company’s earnings call with investors, the shares fell even more as CEO Mark Zuckerberg and his colleagues warned of slowing revenue growth and increased expenses in the months ahead.
At one point, the company’s stock was down nearly 24%, and its valuation had fallen by a whopping $148 billion. That’s about as much as the combined market capitalizations of IBM and Snap — and around the same amount as the total gross domestic product of Hungary.
Facebook’s shares recovered somewhat after the call. In recent trading, they were down $43.99, or 20.2%, to $173.51 a share.
The company’s second-quarter revenue — $13.23 billion — missed expectations by about $70 million. Its average number of monthly active users for the period came in at 2.23 billion, or about 20 million fewer than projected.
More disconcertingly for analysts and investors, though, company officials warned on the call that its annual growth rate would decline by the high single digits, percentage wise, in the second half of the year. The company’s sales grew at a 42% clip in the second quarter, so the forecast implies that its growth rate for the rest of the year will be 35% or less.
What’s more, Zuckerberg warned that the company would continue to make investments going forward, not only in safety and security measures to prevent things like the Russian disinformation campaign seen in the 2016 election, but also in new products and services. Those investments weighed on the company’s profitability in the second quarter and presumably will in coming quarters as well.
This is the second time this year Facebook’s stock has taken such a dramatic downturn. The company’s shares also took a sharp hit in the days following the revelation that Cambridge Analytica had illegitimately gained access to the personal data of tens of millions of the company’s users. They later recovered and exceeded the value they had before the scandal came to light.