Shares of Facebook continued to plunge Thursday, wiping more than $100 billion from its market cap in just hours after the company's CFO forecast a significant drop in revenue growth and margins in the coming quarters.
"Looking beyond 2018, we anticipate that total expense growth will exceed revenue growth in 2019," said Chief Financial Officer David Wehner on a conference call Wednesday. "Over the next several years, we would anticipate that our operating margins will trend towards the mid-thirties on a percentage basis."
Wehner's comments on the conference call came after Facebook said revenues grew less than expected in the second quarter, and its user count missed estimates. The statements accelerated losses in the stock, which was down as much as 24 percent after hours.
"\[We see\] substantial legal and regulatory issues, and really structural changes in the business model, that we're going to see evolve over the next couple quarters at the least," said CFRA analyst Scott Kessler.
In the first earnings report to cover a full quarter since the Cambridge Analytica scandal broke, the social media network said monthly active users grew 11 percent from a year ago to about 2.23 billion people, though analysts were looking for 2.25 billion. Users in the U.S. remained at 241 million, the same level as at the end of March, while users in Europe fell for the first time.
"I think we've hit a point with Facebook where user growth is just going to slow down," said Jason Moser, analyst at Motley Fool, in an interview to Cheddar.
Revenues came in at about $13.2 billion for the quarter, also short of estimates.
The company has been plagued by criticism over how it handles user data for months, and CEO Mark Zuckerberg has not only issued several rare public apologies but even testified before Congress on the issue.
Facebook was also hit with calls to better police the content on its platform, most recently after the company refused to take down a post from right-wing conspiracy theorist Alex Jones, threatening Special Counsel Robert Mueller.
Ad sales rose 42 percent during the quarter but were outpaced by a 50 percent increase in costs, driven by added efforts to address those issues.
Facebook's stock drop, the biggest on a percent basis ever for the company, erased all the gains it had made since its last earnings report three months ago. The loss in market value was bigger than the entire market cap of IBM, McDonald's, and Nike.
The results put pressure on the entire tech landscape, with shares of Amazon, Twitter, Snap, and Google parent Alphabet all falling in sympathy.
Quick facts from Facebook's Q2 earnings report:
* Earnings per share: $1.74 vs. $1.72 estimate
* Revenues: $13.23 vs. $13.36 billion estimate
* Monthly active users: 2.23 billion vs. 2.25 billion estimate
* Daily active users: 1.47 billion vs. 1.49 billion estimate
* Monthly active users in Europe fell for the first time
* Mobile ad revenue accounted for 91 percent of all ad revenue
* Ad revenue grew by 42 percent, but costs grew by 50 percent
For full interview, [click here](https://cheddar.com/videos/facebook-earnings-drop-as-much-as-10-after-slight-revenue-miss)
Former Take-Two CEO Kelly Sumner is looking for the next big game. But rather than investing hundreds of millions, his blockchain-based video game publisher Planet Digital Partners is targeting mid-level games often ignored by big publishers.
"Electronic Arts, Take-Two, Activision ($ATVI), etc., they are spending hundreds of millions of dollars on a game, expecting to be ... getting billions. And the kind of middle, where there's sort of really good, exciting games, isn't there," Sumner told Cheddar Friday.
At Amazon's annual shareholder meeting this spring, a group of investors will be asking the tech giant to halt all governments sales of its proprietary facial recognition technology, known as Rekognition. The software, which scans faces and can read human emotions, tells the government "who we are, what we are, what we're doing, and who we're doing it with," said Michael Connor, the executive director of corporate accountability non-profit Open Mic.
Tesla CEO Elon Musk's email to employees on Friday announcing that the electric car maker will be slashing its workforce by 7 percent is just the latest in a long line of troubles for the embattled company ー troubles that brand and marketing expert Ian Wishingrad don't see ending any time soon.
On Friday morning, Tesla announced it would slash its workforce by 7 percent in order to make a cheaper Model 3 vehicle. Netflix shares were trading slightly lower after the streaming giant reported mixed results in its most recent quarter. Plus, GirlCrew co-founder Pamela Newenham joins our weekly show ChedHER to discuss the inspiration behind her platform.
Microsoft President Brad Smith called for an end to the government shutdown during an appearance on Cheddar Thursday, saying that the political stalemate in the U.S. is contributing to broader international instability resulting from the ongoing Brexit chaos and weakness in the Chinese economy.
Inflated housing prices and long commute times in tech hubs nationwide is "sapping the vitality" from cities, Microsoft President Brad Smith told Cheddar Thursday following the company's announcement it would invest $500 million to address affordable housing and homelessness in and around Seattle, Wash.
TradeStation, the online broker-dealer, is dipping its toes into crypto. Speaking with Cheddar's Tanaya Macheel at the North American Bitcoin Conference in Miami on Thursday, CEO John Bartleman said crypto trading would be a "natural extension" to the asset classes currently offered on the TradeStation platform.
Abra, the crypto exchange and digital wallet startup, is trying to fundamentally change the way banking is done with a simple consumer-facing app that allows users to effectively create "synthetic" dollars using the inherent value of Bitcoin and other cryptocurrencies. Bill Barhydt, Abra's co-founder and CEO, explained the strategy to Cheddar's Tanaya Macheel at the North American Bitcoin Conference in Miami.
Ford Motor Company and Volkswagen AG announced at the Detroit Auto Show they will form a "broad alliance," but the reality of a partnership may present certain conflicts for both companies. "I think that this is going to be a very difficult friendship to make work because Ford ($F) is expected to make some pickup trucks for Volkswagen, which sounds good because Volkswagen needs those pickups in other markets," Nathan Bomey, business reporter at USA Today, told Cheddar Wednesday.
There is a scene in the 2002 sci-fi film "Minority Report" that has always struck me. John Anderton, the film's protagonist played by Tom Cruise, is running through a mall, bombarded by ads from premium brands like American Express and Lexus that are tailor-made just for him. I was always fascinated by that moment in the film ー because it seemed so far-fetched and dystopian, but at the same time, almost pre-ordained.
