Published: Thu, July 26, 2018
Money | By Hannah Jacobs

Facebook loses one million European users to GDPR

Facebook loses one million European users to GDPR

The personal wealth of Facebook co-founder and chief executive Mark Zuckerberg took a major hit.

Facebook lost more than one hundred billion dollars in market value in a matter of hours on Wednesday after the internet company told investors to expect revenue growth rates to decline for the remainder of the year.

Bloomberg reports if that holds through Thursday's close, he will slide to sixth place from third on the Bloomberg Billionaires Index. Fourteen analysts surveyed by Zacks expected $13.43 billion.

Growth in new users slowed with Facebook adding 11 percent more daily and monthly active users on the main Facebook app in the second quarter, compared with 13 percent in the first quarter. Analysts were generally expecting earnings-per-share of $1.72 on revenues of $13.3 billion. The proximate cause was the company's Q2 miss on revenue and user numbers, as it suffered the impact of a string of scandals and the introduction of tough new European data privacy rules.


He said the challenges included regaining public trust as well as increasing the number of people joining Facebook and the time they spent on the platform. The company remains in a dominant position in mobile advertising alongside Alphabet Inc.'s Google.

Pressed by analysts who expressed surprise at the warning, Wehner said that operating margin would be hurt by factors including currency exchange rates and the introduction of new advertising products like the "stories" feature on Facebook and Instagram.

Facebook said that it brought in adjusted earnings of about $1.74 per share for the period, which was two cents ahead of the Wall Street consensus estimate of $1.72 per share, according to Thomson Reuters. Management also warned revenue growth rates would decelerate in Q3 and Q4. The new privacy law forced several changes to Facebook's privacy terms and sign-up process, leading a minority of users to opt for non-personalized ads, which tend to generate less revenue.

Facebook said it had 1.47 billion daily active users in June, compared with the 1.48 billion average of analysts' estimates compiled by Bloomberg.


For almost two years, Facebook has appeared bulletproof despite a series of scandals about the misuse of its giant social network.

Instagram has grown to 1 billion monthly users from 600 million in late 2016, while Facebook's two messaging apps, Messenger and WhatsApp have each reported well over 1 billion monthly users.

Wehner said the "deceleration", as he termed it, is "a combination of factors", including the rising US dollar; what Wehner called the company's newfound "focus on growing engaging new experiences like Stories and promoting of those; giving greater controls to users of the service people who use service for privacy".

Shares, which had already declined 7 percent after hours, then fell as much as 24 percent after the comments on a conference call with analysts. The company said headcount was 30,275 as of June 30 - an increase of 47 percent year over year.


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