Facebook’s Market Cap Loses US$120 Billion Following Q2 Earnings

Facebook (NASDAQ:FB) on Thursday (July 26) lost US$120 billion in its market cap, while CEO Mark Zuckerberg lost US$19 billion in net worth as the social media giant warned that its revenue growth rate will decelerate in the second half of 2018.

The company’s second quarter results revealed the company posted revenue of US$13.2 billion during the quarter, which was a 42 percent increase year over year. Further, the company said that the monthly active users base has hit 2.2 billion users with close to 1.5 billion daily active users.

However, it was during the Q2 earnings call that caused panic among investors which led to the biggest market cap wipeout in US history.

David M. Wehner, CFO of Facebook said that the growth rates will decline by single digit percentages in third and fourth quarter of the year.

“There are several factors contributing to that deceleration,” Wehner said on the call.  “We are also giving people who use our services more choices around data privacy, which may have an impact on our revenue growth.”

Wehner also said that the company plans to grow and promote certain products that currently has lower levels of monetization within the company like Stories. The growth rate decline will be compounded by the fact that Facebook’s expenses is set to grow by at least 50 percent as compared to previous year.

Wehner said that the company would increase its investment in areas like safety and security, augmented reality, and content acquisition.

“Looking beyond 2018, we anticipate that total expense growth will exceed revenue growth in 2019,” Wehner said.

The introduction of General Data Protection Regulation (GDPR) in Europe has also hit its user base growth in Europe and has stalled in North America.

“It’s worth noting that MAU and DAU in Europe were both down slightly quarter-over-quarter due to the GDPR roll out, consistent with the outlook we gave on the Q1 call,” Wehner said.

Following the announcement, the shares of Facebook declined 18.6 percent to close the trading session on Thursday at US$176.26.

Despite the massive market cap dip, most recent analysis ratings still have a “Buy” ranking on the stock. According to data from, TipRanks, the average analyst price target is US$210.70.

However, the stock has a strong sell ranking on TradingView with 17 verticals against, eight “Neutral” and one in favor.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.