Is Facebook On The Verge Of Becoming The Largest Wipe-Out In American History?

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Facebook Inc. (NASDAQ:FB) has been a pioneer at setting up milestones. However, as per the  Second Quarter 2018 Results, Facebook’s revenue deceleration is the talk-of-the-town and it looks like, Facebook is on the verge of becoming the largest wipe-out in American history!

Facebook recently announced their second fiscal quarterly results which look tarred and feathered. Apparently, with revenue of $13.2 billion compared to a consensus of $13.36 billion, Facebook’s growth has hit a wall.  The miss of 1.0%, seems tiny, while on contrary has proved to be a huge financial stumble on the part of the social media giant.

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Again, if this doesn’t make Facebook down-and-out, its market capitalization experienced a nose-dive, by about $151 billion due to which investors were down in the dumps after witnessing such a sales figure.

Additionally, this is no skeleton in the cupboard that, the second quarter has been a crucial period for the company, following data breach scandals.

Scandals Take A Toll On Facebook

It seems Facebook’s “little” pocket-book of scandals and criticism has finally thrown the tech-giant to rock-bottom. After the earnings call on Wednesday, Facebook valuation plunged as much as 20% – the record loss of valuation within 24 hours of the results announcement.

The social-media leviathan’s existence, on financial grounds, has been absolutely immune to aggressive chides and criticism. However, the bared-out reports about its sales and user growth have hit Facebook like tons of bricks. These declining projects have sent investors on a deep-thinking spree!

Facebook’s fortune has been through a series of tremors and it began towards the end of 2016 with Facebook being alleged of spreading misinformation and has been exacerbating since. The role it plays in the Cambridge Analytica Scandal has raised many eyebrows in the sphere, and this plummet in its revenue seems like repercussion of the same.

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Facebook’s Revenue Deceleration Appears Staggering!

Facebook has seen unfavourable growth rates since last year, however, the recent revenue growth surely throws a curve. Facebook reports a revenue growth of 42% YoY and 10.57% QoQ in Q2 2018.

facebook revenue growth

Now, the bigger grill here is, was there any anticipation around such declining growth rates, given the obvious indiscretions Facebook has made in the recent past?

To take-in this scenario, one can see how the revenue growth has been falling. Clinging on to 42% now, one can only imply that revenue growth might further slip down in the upcoming quarter, or say, the second-half of 2018.

Facebook shares have gone through such a steep decline, wherein it falls to around $200 prior to Facebook’s earning while shares marked a halt at $217. The growth in digital advertising sales has also seen a clear deceleration this quarter. To make a statement, Mark Zuckerberg added that the current trajectory is not improving, that too even when Facebook has been working on and trying to improve privacy-related issues.

Red Flags On Facebook’s Reig!

What made the social media giant’s shares to hollow up by over 20%?

Out of many other factors affecting Facebook’s user base, Zuckerberg feels that tough European rules meant to protect people’s data online has played a quick role. Apparently, the legislation, dubbed as General Data Protection Regulation has wiped off about one million Facebook users in Europe.

 

The company after missing revenues and a stagnant user growth in this quarter has surely reeled off investors. But, still, the company boasts of a dominant position in mobile advertising. Even with such huge loss, following financial rates, it can still ensure its spot as the fifth-largest publicly traded firm in the US.

Now what seems like a challenge, is how Facebook can stem and curb further losses, sluggishly incoming its way!

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