Facebook value takes US$120bn hit following lower profit forecast

Facebook has seen a wipe out in the US stock market following a forecast of lower profit margins for the company. According to Reuters, this saw shares closing down almost 19% at US$176.26, wiping more than US$120 billion off the company’s value. At least 16 brokerages had also cut their price targets on Facebook.

According to several media outlets, this was following recent insights from a Facebook earnings call with analysts, which saw Facebook CFO David Wehner revealing that full-year 2018 total expenses will grow in the range of 50%-60% compared to last year. This expenditure was said to be driven by increasing investment in areas such as safety and security, AR, VR, marketing and content acquisition. This is in addition to increases in core product development and infrastructure.

Full-year 2018 capital expenditures is also projected to be approximately US$15 billion, driven by investments in data centres, servers, network infrastructure, and office facilities. The company also anticipates that total expense growth will exceed revenue growth in 2019. Wehner said: “Over the next several years, we would anticipate that our operating margins will trend towards the mid30s on a percentage basis.”

That being said, the company gained US$13 billion in advertising revenue for the three months ending 30 June 2018. Mobile advertising accounted for approximately 91% of advertising revenue for the second quarter of 2018, up from approximately 87% compared to the year before. Overall, company revenue grew 42% year-on-year (yoy) to US$13.2 billion.

Daily active users were at 1.47 billion on average for June 2018, an increase of 11% yoy.  Meanwhile, monthly active users were 2.23 billion as of June 30, 2018, an increase of 11% yoy. According to Bloomberg, user growth had missed estimates.

Most recently, Facebook also Mark D’Arcy’s role to being the platform’s VP of global business marketing. This was in addition to his current duties as chief creative officer and sees him taking over from Sarah Personette, who left Facebook to become the COO of Refinery29, Adweek reported. The move will also see D’Arcy co-lead with Carolyn Everson, Facebook’s vp of global marketing solutions. Meanwhile, global creative director Andrew Keller will take on duties for Facebook’s Creative Shop in the interim.

During his time as chief creative officer of the Facebook’s Creative Shop, D’Arcy led a team of creative strategists in 18 cities around the world, according to his LinkedIn. He joined the company after two decades working as a writer and chief creative in advertising and media. He joined Facebook in 2011 to better explore the creative potential of the Facebook platform.

Prior to Facebook, D’Arcy spent seven years at Time Warner in New York, as chief creative officer of its Global Media Group. In 2009, he was also named president of the group and SVP of Time Warner.

Marketing has reached out to Facebook for comment.