Facebook's shares fall as growth chart doesn’t satisfy investors

Company - Mohit Shah - Jul 27,2018

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facebook shares fall as growth chart doesnt satisfy investors

On Wednesday, social media giant Facebook has experienced a significant drop in shares ranging to 20% since user growth couldn’t meet investor expectations.

The renowned social media portal, Facebook, which is facing repercussions due to its privacy and fake news tussle, announced it had 2.23 billion monthly active users until June end.

Even though it was an 11% rise from the statistics recorded in June 2017, it is viewed as the slowest growth since the past two years. In addition, investors are further warned that spending growth will surpass revenue gains in the year 2019, which are expected to hamper profits.

Facebook added to its announcement that they expected this situation, as users make use of fresh options to restrict advertising and less lucrative overseas markets push growth.

The company’s shares initially fell by 12% in after-hours trade as noted in New York; however, losses enhanced as the firm bordered its spending plans.

It has been analyzed that, user growth in the US and Canada has compressed, considering they are the key markets for Facebook. Furthermore, the count of EU users has also tumbled as a result of tighter privacy regulations.

Chief strategy officer at GBH Insights, Daniel Ives, termed Facebook’s forecast as "nightmareish". He further added that, the firm has delivered a “very disappointing outlook” for the remaining half of 2018 and the year to follow.

With an aim to rise from these disappointing figures, the company plans to devote billions to enhance the method through which it monitors content, spots advertisers and process user data; basically areas where the firm has faced regulatory scrutiny.

Also, with the possession of Instagram and WhatsApp, the social media giant is testing new features like virtual reality and video in order to motivate a future boom in the user population.