Facebook is sued after stock plunge 'shocked' market

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Despite the rocky quarter, Facebook shares had hit an all-time high before Wednesday's earnings report and its quarterly revenue was still up 42 percent from this time a year ago. "In the US and Canada, Facebook's daily active users remained flat, sequentially, at 185 million, while the number actually fell in Europe, falling to 279 million - down from 282 million".

In midday trading Thursday, the company's market value (the number of outstanding shares multiplied by the value of a single stock), fell by more than $122 billion.

The company's second-quarter revenue - $13.23 billion - missed expectations by about $70 million. Overall, Facebook grew its global users by 11 percent from the same time a year ago.

Facebook also had 185 million North American DAUs and 279 million European DAUs, below the FactSet forecasts of 185.4 million and 279.4 million respectively.

Wall Street didn't take too kindly to that: Facebook's stock price dropped almost 20 percent in after-hours trading.

"Our total revenue growth rate decelerated approximately 7 percentage points in Q2 compared to Q1", he said.

"Unlike Netflix, whose quarterly shortfall we saw as temporary, here we see an evolution of the story, albeit a portion of which we expected", said Daniel Salmon, analyst at BMO Capital Markets.

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It was a grim day for Facebook on Wall Street

During the call, Facebook Chief Executive Mark Zuckerberg tried to recast the disappointing earnings.

According to the research firm, Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate $8.06 billion in worldwide ad revenue this year.

More likely, though, market buzzards are holding off because of how quickly some analysts are turning on the company.

What's more, Zuckerberg warned that the company would continue to make investments going forward, not only in safety and security measures to prevent things like the Russian disinformation campaign seen in the 2016 election, but also in new products and services. "Earnings per share were $5.07, smashing analysts" estimations of $2.50. The social media company has contended for years with criticism about its content policies, its failure to safeguard private data and its changing rules for advertisers. "Real world issues that people thought should affect the company are now affecting the company".

On Thursday afternoon, Facebook watched its capitalization drop by $119 billion, lowering its valuation to $510 billion, which represents a 19 percent drop, according to CNBC.

Facebook suffered a blow in China on Wednesday when regulators there withdrew their approval of a company innovation hub to support local startups, the New York Times reported on Wednesday, citing a person familiar with the matter.