Author: Jean Baptiste Su / Source: Forbes
Years of privacy controversies finally caught up with Facebook.
Thus, despite announcing another solid quarter – revenue up 42% year-over-year to $13.2 billion and profits up 31% at $5.1 billion – more than $130 billion (as of this writing) were wiped off Facebook’s value in the biggest one-day drop in stock market history.
In a recent note to clients, we highlighted the 3 reasons for Facebook’s stock implosion:
- A dramatic deceleration in revenue growth, from 40% plus to a bit more than 20%
- Slowest-ever user growth, plus negative growth in Europe
- A huge increase in spending (hiring, tech infrastructure, data privacy) that will significantly cut into profits
Atherton Research Viewpoint
Facebook expects revenue to “decelerate” in the second half of 2018, declining by high-single-digit percentages (8%-9%) from prior quarters sequentially in both Q3 and Q4. What it means is that by the end of the year, Facebook’s revenues will grow year-over-year in the 20 percentage points versus 40% or more – hardly a growth stock anymore.
But what is most shocking is that Facebook’s decline in revenue growth is mostly self-inflicted.
Despite Europe’s stricter privacy rules,…
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