Facebook Stops Growing In Its Most Lucrative Markets

Facebook’s 2018 third-quarter earnings report is a confirmation that the social network company has ended the era of nonstop growth. The company’s growth in the US, Canada, and Europe has stopped completely, with figures of daily active users slightly going bearish in Europe.

The social giant confirmed at the earnings report that the number of daily active users (DAUs) in Europe is down by 1 million: from 279 million DAUs to 278 million DAUs, while the figure for the US and Canada has remained flat at 185 million. The former may be as a result of the newly implanted EU privacy regulations – GDPR, which caused Facebook to lose about 1 million monthly active users in May when it was implemented.

However, Facebook’s performance in other parts of the world was not the same. The company’s daily active user base grew 9% year-over-year to a total of 1.47 billion users, while its monthly active users grew 10% within the same period to 2.77 billion users.

Facebook came under Wall Street analysts’ estimate by growing its ad revenues to $13.73 billion, 33% year-over-year, but went over analyst expectations with a profit of $1.76 per share. However, the growth figures of its daily and monthly active user came under Wall Street estimates. The company had warned investors and the press earlier, in its last quarter, about an inevitable growth decline in the future – an announcement that caused Facebook to suffer the biggest ever loss in the history of American stock market.

European parliament Mark Zuckerberg

Mark Zuckerberg at F8, 2018. Source: Facebook

A significant transition will be necessary to keep Facebook afloat

While Facebook’s current financial performance continues to rate the company among top Silicon Valley elites, its future doesn’t look rosy without a major break such as the significant transition CEO Mark Zuckerberg has been preaching about. Zuckerberg pointed out three areas that are critical to the future of the social network company to include:

  1. News Feed (Stories features)
  2. Messaging
  3. Video

He also disclosed that the company will prevent users from leaving by beefing up its security, effectively handling concerns over user privacy, and purging fake news, junk and other unwanted forms of sharing from its platform

Facebook has faced a number of high-profile security and data privacy scandals over the past two years. The most recent involving a substantial security defect that allowed a hacker to steal the login details of millions of Facebook users and the most prominent being the Cambridge Analytica tragedy.

Facebook shares went down 6% before going back up 5% after trading hours as investors analyzed comments from Zuckerberg on the future growth and spending. After the earnings call, the shares finally went around 3% to settle in the positive range. Facebook is expecting capital expenditures between $18 billion to $20 billion in 2019, according to the CEO. The company plans to focus on building out new products such as Instagram TV, Facebook Watch and Facebook Marketplace.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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