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)
Even creative industries like advertising aren't exempt from advances in technology and automation. "Brand tech" firm You And Mr Jones took a majority stake in Inside Ideas Group, a company that helps brands form their own internal marketing groups.
The future is all-electric ー at least for General Motors, the carmaker's Chairwoman and CEO Mary Barra said on Cheddar Friday. "At General Motors, we believe in an all-electric future," Barra told Betty Liu, executive vice chairman for the New York Stock Exchange, through a special partnership between Cheddar and NYSE. "We believe that's the path forward, and that's why we are dedicating resources to build on the Chevrolet Volt first and second generations, now the Chevrolet Bolt EV."
Is it time for the federal government to hire its own chief information officer? Rep. Will Hurd (R-Tex.) thinks so. He told Cheddar Friday that the recent spate of major data breaches warrant a federal czar to help protect consumers and potentially even levy penalties on companies that don't do enough to safeguard users' information.
These are the headlines you Need 2 Know for Friday, Jan. 11, 2019.
Cryptocurrencies and digital assets are ideally left to the jurisdiction of the U.S. Commodity Futures Trading Commission, rather than the Securities and Exchange Commission, according to Congressman Darren Soto (D-Fla.). "Securities laws can be very intense and hurt the market unless it’s truly a security,” Soto told Cheddar Thursday.
Bitcoin's rebound over the $4,000 mark was short-lived, tumbling on Thursday below the $4,000 price level for the first time since Jan. 6. "I think it is a good chance we are going to retest 3,000 as a low and there is a good chance it will probably break through that ー if it hits that low," said Civic CEO Vinny Lingham in an interview with Cheddar. "The market is definitely trying to find a bottom, and I don't think we've found one yet."
Cristiano Amon, president of Qualcomm, spoke to Cheddar's Hope King from CES, where Qualcomm is unveiling several new products and initiatives, including A.I.-based infotainment centers for vehicles. But the big story of the year, Amon said, will be the spread of 5G technology, which he expects to be in most major cities and on most new Android devices by the second half of this year.
Adoption of new technology won't necessarily cause jobs to disappear ー even if that technology is a humanoid robot, said Steve Carlin, the chief strategy officer of SoftBank Robotics America. "I think the incorrect assumption is simply because you're employing technology, that therefore a job has to go away," Carlin told Cheddar's Hope King on Thursday.
Dustee Jenkins, global head of communications for Spotify, came to CES to "put a stake in the ground" for podcasting. She told Cheddar that Spotify still sees upside in new forms of audio storytelling, and its "discover" algorithm can help users find podcasts that will appeal to them, much in the way millions of people use the feature to find new bands.
GoPro has carved out a niche for itself as the go-to maker of action cameras. And one trend in particular helped kick-start the camera-maker's success: the selfie. CEO Nick Woodman told Cheddar's Hope King the company had a real "aha" moment around 2009 when it introduced high-definition (HD) footage into its selfie-style camera.
