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)
Federal regulators have subpoenaed Snap as part of a probe into its 2017 initial public offering, the company confirmed in a statement to Cheddar.
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Petco will phase out dog and cat food containing artificial ingredients and preservatives entirely by May 2019. Petco CEO Ron Coughlin told Cheddar Tuesday that the decision to move to a wholly natural-ingredient line was part of a corporate strategy to become a full-service "partner to pet parents." It also reflects broader consumer trends toward healthier, organic foods ー that now includes the diets of their pets.
Hybrid cloud computing is now the name of the game at IBM, thanks to the company's recent acquisition of Red Hat. "We are going to be the company that is providing enterprise-ready hybrid cloud solutions and actually create the foundation of the infrastructure of the future," IBM's chief digital officer Bob Lord told Cheddar on Tuesday.
The backlash was swift after Amazon announced on Tuesday morning that it will split its second unbuilt headquarters and up to 50,000 full-time jobs between two locations: Long Island City, in Queens, N.Y., and the Crystal City neighborhood of Arlington, Va, just outside the nation's capital.
The Food and Drug Administration plans to restrict the sale of flavored e-cigarettes that might appeal to teens, according to a Washington Post report. But some worry a ban will only further entice young users. "Some people say it will just make it more attractive. That's one of the problems ー the more you restrict it, the more enticing it can be," USA Today health care policy reporter Jayne O'Donnell told Cheddar on Monday.
From the makers of the dating app, Bumble, the newest dating app exclusively for gay men is here. Chappy caters gay men and Adam Cohen-Aslatei, managing director of Chappy, said the app not only wants to help make meaningful relationships, but combat the discrimination seen in other dating apps.
The subject of gambling and esports has become a point of serious tension for gamers. For companies like Unikrn, which built its platform on the practice of esports betting, battling that stigma is a central, implicit part of the operation. According to CEO and co-founder Rahul Sood, the company is determined to make betting on esports a “safe, legal, and relegated” space.
