Facebook succumbed to the public backlash over its handling of fake news, privacy, and digital wellbeing to miss Wall Street’s estimates in its Q2 2018 earnings, it’s first. GDPR, Mark Zuckerberg’s testimony before congress, and more scandals didn’t stop Facebook from reaching 2.23 billion monthly users, up 1.54 percent, much slower than Q1’s 3.14 percent growth rate. Facebook earned $13.23 billion in revenue with $1.74 EPS compared to Thomson Reuters consensus estimates of $13.36 billion and $1.72 EPS.
Daily active users reached 1.47 billion, up 1.44 percent percent compared to Q1’s 3.42 percent. Facebook’s daily and monthly user counts were up 11 percent year-over-year, confirming that the momentum of its business is still overpowering its PR problems.
The quarter saw Facebook clamp down on APIs for developers in hopes of preventing another Cambridge Analytica style disaster. Its CEO faced tough days of questioning from congress over the privacy problem, alleged bias against conservatives, and its failure to protect the 2016 presidential election. Facebook tried to redirect attention away from its problems during its F8 conference that saw it announce plans for a dating feature. But all the problems may be taking a toll on user engagement, leading to the revenue miss. Weak daily and monthly user growth should be a big concern, and will put even more pressure on Instagram to prop up the corporation.
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