Facebook Revenue and User Growth Miss Estimates as Scandals Hit

Facebook saw the first signs of user disenchantment in the midst of public scandals over privacy and content, with second-quarter revenue and average daily visitors missing analysts’ projections, according to Bloomberg.

Chief Financial Officer David Wehner said sales growth will continue to slow through the rest of the year. Shares, which had declined about 7 percent in extended trading, fell as much as 23 percent after Wehner’s comments on a conference call with analysts.

Revenue, fueled by mobile advertising sales, increased 42 percent to $13.2 billion in the quarter, Facebook said Wednesday in a statement. Analysts projected $13.3 billion. The quarter marked the first time Facebook had missed analysts’ revenue projections since 2015.

“We expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4,“ Wehner said on the call. Facebook sales increased 47 percent, year over year, in both the third and fourth quarters, of 2017. The company reported net income of $5.11 billion, or $1.74 a share, compared with analysts’ average estimate of $1.71 a share.

Facebook said it had 1.47 billion daily active users in June, compared with the 1.48 billion average of analysts’ estimates. The company’s user base was unchanged in its biggest market, the U.S. and Canada, at 185 million daily users, while declining in Europe to 279 million. Overall, average daily users increased 11 percent from the period a year earlier.

The company remains in a dominant position in mobile advertising alongside Alphabet Inc.’s Google. Facebook said mobile made up 91 percent of ad revenue in the recent period, compared with about 87 percent a year earlier.