Facebook's stock dives 20% on dire predictions following second-quarter financials

Facebook shares sink 8% as Q2 revenue and user growth misses analyst estimates

Facebook stock dives nearly 20% on warning of slow revenue growth

The proof was in Facebook's stock, which during the call was down as much 24% from its price at the close of regular trading.

The company's shares plunged $41.24, or nearly 19 percent, to $176.26 a day after the social media giant reported disappointing results.

The investor purge came after the company revealed its user-base and revenue grew slower than expected as it grapples with privacy and censorship concerns. Amazon.com Inc fell 2.8 percent ahead of its own results report later on Thursday.

Facebook founder Mark Zuckerberg also took a $14.5 billion (£11 billion) hit to his own personal fortune in the process due to owning almost 17% of the company's shares. He lost $16.8 billion in extended trading.

After-hours declines don't always hold the next day.

David Wehner, Facebook's CFO, said during a call on Wednesday that the company's decision to give users "more choices around data privacy" following the Cambridge Analytica scandal and GDPR compliance "may have an impact on our revenue growth".

Other companies have, in the past, experienced similar plummets on the stock exchange, if not quite as severe as Facebook, who are now battling new data laws and public concern over their privacy policies.

Mark Zuckerberg, the chairman and chief executive of Facebook, lost more wealth in a single day than the entire market value of Molson Coors Brewing Co, or Nasdaq or Ralph Lauren Corp.

And Facebook warned that revenue growth from emerging markets and the company's Instagram app, which has been less affected by privacy concerns, would not be enough to fix the damage. It recorded sales of $13.23 billion for the three months ended in June, short of the $13.3 billion Wall Street anticipated. Combine this pessimistic outlook with 1.54% user growth and 1.44% daily active users which are half of last quarter's growth percentage and we're looking at a company that is getting squeezed at both ends.

According to techcrunch.com, it seems as if Facebook announced the stat in hopes of deflecting attention from the fact that its user count shrank in Europe and was flat in the U.S. and Canada, contributing to extraordinarily low monthly and daily user growth. Facebook saw a decline in Europe to 279 million daily users.

Net income was $5.11 billion, or $1.74 a share, beating analysts' estimate of $1.71 a share.

Facebook just made the wrong type of history. Controversies came and went, but nothing stuck.

Facebook was downgraded by a number of industry analysts who were caught off guard by slowing growth in the wake of the Cambridge Analytica scandal.

"While those actions might take time to play out, it is still possible that threatened fines associated with GDPR to Facebook or other sellers of advertising could also have the effect of spooking advertisers into changing how they use data", said Wieser, who thinks the shares should be worth $140 USA - well below Thursday's level.

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