Slowing revenue causes Facebook stock to fall.
Facebook's daily user growth has fallen for six consecutive quarters, reaching 1,47 billion in the second quarter compared to 1,23 billion at the end of 2016.
(Reuters)- Facebook (FB.OThe social network warned on Wednesday of slowing revenue growth in the second half of the year and said expenses will grow faster than revenue next year, causing its shares to fall 19 percent amid concerns about the impact of user privacy issues on its business.
The company warned investors to expect significant cost increases due to efforts to address concerns surrounding user privacy issues and to better monitor what users post on the social network. Total expenses in the second quarter rose to $7,4 billion, a 50 percent increase over the previous year.
The growth of new active users of Facebook's main app slowed to 11 percent in the second quarter, compared to 13 percent in the first quarter.
"Our total revenue growth rates will continue to slow in the second half of the year, and we expect our revenue growth rate to fall into high single digits in the third and fourth quarters," said the social network's CFO, David Wehner.
Facebook's revenue grew at its slowest pace in nearly three years, rising 14 percent year-over-year to $13,2 billion in the second quarter. The company reported a profit of $5,1 billion for the period, or $1,74 per share, roughly in line with analysts' estimates, according to Thomson Reuters I/B/E/S data. Operating margin fell from 47 to 44 percent.
Facebook's daily user growth has fallen for six consecutive quarters, reaching 1,47 billion in the second quarter compared to 1,23 billion at the end of 2016.
Meanwhile, Instagram grew to 1 billion monthly users, up from 600 million at the end of 2016. Facebook's two messaging apps, WhatsApp and Messenger, each had over 1 billion monthly users in the second quarter.
Approximately 2,5 billion people use at least one of the company's apps each month, Facebook executives told analysts.
Instagram is expected to account for 18 percent of Facebook's revenue this year and 23 percent in 2019, according to market research firm EMarketer.
By Munsif Vengattil in Bangalore, India, and Paresh Dave in San Francisco