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Facebook’s shares tumble as growth disappoints

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Isaac Kaledzi is an experienced and award winning journalist from Ghana. He has worked for several media brands both in Ghana and on the International scene. Isaac Kaledzi is currently serving as an African Correspondent for DW.

Facebook shares tumbled 20% on Wednesday after the social media network’s revenue and user growth fell short of investor expectations.

The firm, which is facing backlash for its handling of fake news and privacy, said it had 2.23 billion monthly active users at the end of June.

This was up 11% on June 2017, the slowest growth in more than two years.

It also warned investors that spending growth would outstrip revenue gains in 2019, pinching profits.

Shares in Facebook initially fell about 12% in after-hours trade in New York, but losses accelerated as the firm outlined its spending plans.

Facebook reported revenue of $13.2bn for the three months to the end of June, up 42% year-on-year.

Expenses, however, grew even faster, rising 50% to about $7.4bn.

Facebook said the trend would continue, as it spends billions to improve the way it monitors content, tracks advertisers and treats user data.

The firm also plans to invest in new features, such as virtual reality and video.

“Our community and business continue to grow quickly,” said Mark Zuckerberg, Facebook founder and chief executive. “We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect.”

Facebook profits in the quarter were $5.1bn, up 31% from the same period in 2017.

It continues to attract new users in countries like Indonesia, but it saw users slump in the EU amid the rollout of tighter privacy regulations.

User growth was flat in the US and Canada, key markets for the firm due to the high prices ads there command.

Facebook boss Mark Zuckerberg has appeared before regulators this year. Photo: Reuters

Daniel Ives, chief strategy officer at GBH Insights, said the results were mixed, but the firm’s underlying performance was “good enough”.

The popularity of Instagram should help Facebook blunt any fallout from challenges at its namesake network, he added.

In February, the research firm eMarketer estimated that the number of Facebook users under the age of 25 would fall by about 2 million this year.

But it forecast that Instagram, which is owned by Facebook, would add about 1.6 million users in that age range in 2018.

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Source: BBC

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