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)
AT&T announced on Wednesday that it will launch a streaming video service next year, with offerings from its newly acquired HBO, Turner, and Warner Bros units. Richard Plepler, CEO of HBO, said the company is committed to investing in new content and that 2019 will be the "most robust and varied year of programming" for HBO.
Hurricane Michael strengthened to a Category 4 overnight as it barrels towards the Florida Panhandle. AccuWeather predicts the hurricane will cause $30 billion in damage. SoftBank is reportedly in talks to take a majority stake in WeWork. Plus, Cheddar's Alyssa Julya Smith chats with actor Caleel Harris about what to expect from the upcoming 'Goosebumps 2: Haunted Halloween' movie and his role in Ava DuVernay's 'Central Park Five' TV series.
While the Dow took a major slide on Wednesday, Chinese electric car company NIO is surging for the second straight day. But can the Tesla rival compete with its American counterpart? Tamara Warren, co-host of Cheddar Rides, points out the company needs to start producing its own cars first.
Robinhood has built its own clearing system that will let it clear and settle transactions and custody assets for its now six million customers without using any third parties. The stock trading start-up expects Clearing by Robinhood, a two-year-old regulatory and engineering project, to provide a faster and cheaper offering for users. Co-CEO Vlad Tenev likened it to Apple building its own chips in-house or Amazon running and investing in its own fulfillment centers. Clearing, he said, is a foundational layer, but it impacts the end user experience.
With less than 10 days left until recreational marijuana is legal across Canada, Alyson Martin, co-founder of Cannabis Wire, explains how rollout will go. As for the future of legalization in the U.S., she says it's inevitable. "Young people might be the path to legalization," she said.
As Aston Martin stock stumbles in the days following its IPO, the British luxury automaker is not interested in expanding its potential market with less expensive "entry-level" cars. CMO Simon Sproule said the company is focused on new electric models and a forthcoming SUV. And they will be expensive.
The tech giant unveiled two new Pixel smartphones, a smart home assistant with a touchscreen, and its first-ever Pixel Slate Tablet. Hope King was at the launch event in New York to get a hands-on look at all the latest gadgets.
As VC funds shovel money into start-ups, they have noticeably stayed away from Juul, even as it exploded in growth and catapulted to become the most valuable vape brand. Erin Griffith, correspondent for the New York Times, said investors appear to be taking a moral stand, even as they simultaneously invest in other nicotine-delivery products.
SoundCloud announced Tuesday that it is expanding its "Premier" feature, which takes a focus on the scores of musicians who use the service to record and promote their work. CEO Kerry Trainor said this feature will allow artists to be directly monetized on the platform, and it will rival any process at other streaming services like Spotify or Apple Music.
Google's Pixel event kicks off on Tuesday in New York City. The company is expected to announce three new phones, with one costing upwards of $1,000. Russell Holly, Senior Editor at Android Central and Ajay Kumar, Mobile Analyst at PCMag, give their predictions for the future of Google's hardware ecosystem.
