Facebook just had its worst week in the company’s history

Ann Santiago
July 27, 2018

Eastern time. Snap's shares were down by more than 2 percent.

Chief financial officer David Wehner startled analysts by saying the company faced a squeeze on its business that could last years. Facebook suffered a blow in China on Wednesday when regulators there withdrew their approval of a company innovation hub to support local startups, the New York Times reported on Wednesday, citing a person familiar with the matter. "We run the company for the long term, not just for this quarter", he said.

"For such a big company to suffer such a significant decrease in price is really wonderful to watch", said Erik Davidson, chief investment officer at Wells Fargo Private Bank.

It was the first full financial report since Facebook became embroiled in the Cambridge Analytica scandal in March. Analysts said the law contributed to the company losing 3 million daily users in the European Union during the second quarter, the first time it has seen such a dip. The company was bombarded by public criticism over its content policies, especially in countries such as Myanmar and Sri Lanka where misinformation has led to violence. But the number of American users who use Facebook every month has flatlined, the company reported, raising questions about how much longer the social network can continue to expand in the US market.

Some analysts said Facebook's issues would not be easily resolved.

The company earned $5.1 billion, or $1.74 per share, up 31 percent and above analysts' estimates of $1.71.

Investors' alarm was likely triggered by a failure in growth in its most important markets, the combined USA and Canada segment and Europe. However, average revenue per user in the region rose despite the lack of growth.

The plunge came one day after the firm missed revenue forecasts for the second quarter and warned that growth would be far weaker than previously estimated. The social network still holds one of the world's most valuable sets of data on what people are interested in, and makes that audience easily available to advertisers.

Facebook has drawn investors because of its fast growth of users and profits.

He added: "We are also giving people who use our services more choices around data privacy which may have an impact on our revenue growth". Facebook is rolling out a version of those protections to the rest of the world.

This was up 11 per cent on June 2017, the slowest growth in more than two years. While several analysts downgraded the stock, others say they still have faith in the company to grow over the long-term. The company may have halted more ad purchases than expected as it applied a broad definition of what's considered "political".

Also in April, Facebook issued a statement after it was reported that "malicious actors" used the social media network's search tools to get personal information from millions of users.

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