Facebook didn’t beat earnings this quarter and had their biggest drop in market value ever.
What’s the excuse?
Can they rebound from public humiliation?
FB (Facebook, $174.00) I have one word for you…ouch.
F.A.A.N.G lovers are not happy with FB missing estimates and the company is still expecting a decrease in revenue in the next quarter. After the earnings call, their stock fell a whopping 23% in after-hours trading. Yet, what kept FB for beating earnings?
(Image from Yahoo!Finance. After-hours trading plummets from the Q2 call)
GDPR (General Data Protection Regulation)
FB is still fighting with issues associated with GDPR. And due to the sole fact that it’s not yet completed, their ads aren’t all up and running it’s interfering with their revenue.
FB is concentrating on adding more value to their FB stories feature on their website. Though they have updated their feature multiple times this year, this doesn’t satisfy their shareholder’s feelings for missing over $100 million in revenue. This focus led them to less monetization.
Just before the earnings call, FB hit an all-time high of $218.63 in stock price. FB also announced at the beginning of their earnings call that at least 1/3 of the world’s population now use at least one of FB’s products each month.
Though this was a tough pill to swallow, will the stock be able to rebound a few days after this disaster?
Investors are already seeing FB on a 20% discount, yet others are banishing them from their portfolios. But does this make FB a bad company? This is a historic fall from their early years in 2012 from a drop of only 12%. Many agree FB will eventually recover from their loss, but investors have very high expectations.
But before they move forward, FB has to clear the GDPR issues with Europe. The company has already told their shareholders that the next quarter will not be appealing to them either. We hope FB can quickly solve these issues before they are run down again by more rumors. I think they have felt with enough this year.
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