The Facebook Inc. (FB) executives on Wednesday saw investors’ inevitable reactions on 2018 Q2 earnings. The social media giant earned $13.2 billion revenue during the quarter ended on June 30, 2018, compared to $9.32 billion generated in the same duration last year.

Highlighting the gravity of the situation, the growth of Facebook decelerated 7 percent in Q2 with $370 million total revenue when evaluated against $536 million revenue earned for the Q1 this year.

David Wehner, Chief Finance Officer of Facebook had earlier warned shareholders about the company’s slow growth at the earnings call of the quarter ended on March 31. He pointed out that in light of amendments in transparency rules and GDPR roll-out, the corporate performance should get affected in major dimensions.

FB Stock Crashes Brutally

Following the declaration of second quarter’s slow revenue growth, FB stock (NASDAQ: FB) fell from minus 7 percent to over minus 20 percent during after-hours trading on July 26, 2018, falling to $173.50 per share.

Contrarily, right ahead of 2018 Q2 earnings call on Wednesday, the company’s stock had hit a record high peak of $218.62/share in all-day trading before closing at $217.50 per share.

In brief, Facebook lost almost $120 billion in market capitalization within a couple of hours yesterday. Whoops, that’s a valuation that most start-ups are ever worth of!

Facebook 2018 Q2 Earnings Call Details

On the positive note, with $13.2 billion total revenue and $13 total billion ad revenue at the end of Q2, Facebook’s both revenues rose 42 percent year-on-year individually. Moreover, the company stocked up a net income of $5.1 billion and earnings per share (EPS) came in at $1.74 for this year’s second quarter, compared to $3.89 billion and $1.32, respectively in Q2 of 2017.

The actual figures overtook the analysts’ projections of $13.34 billion in revenue and earnings of $1.71 per share.

Count of Active Users on Facebook

Wehner reported that the count of daily active users (DAUs) on the social media site has reached 1.47 billion by the end of June 30, 11 percent up from the previous year. The increase in DAUs was led by India, Indonesia, and the Philippines.

Likewise, there are 2.23 billion monthly active users (MAUs) on Facebook in Q2, 11 percent growth from 2017 Q2.

When categorizing user growth region-wise, the USA and Canada saw a flat increment whereas the user count plunged in Europe, consistent with the company’s forecast at Q1 call with reference to the new privacy law roll out.

During 2018 Q2 earnings call, Founder and CEO of Facebook Mark Zuckerberg informed that 2.5 billion people use at least one of the apps from the company’s portfolio, i.e. Facebook, Messenger, Instagram, and WhatsApp. To clarify, he added that the statistics reflect individual people count rather than active accounts. Eventually, the consolidated numbers hide the shift of users from Facebook to Instagram and WhatsApp, a key concern of the company, reports Techcrunch.

Other Financial Details

In 2018 Q2, the operating income recorded $5.9 billion whereas capital expenditures reached $3.5 billion. The majority of those expenses were driven by investments in data centers, servers, network, infrastructure, and office facilities.

Besides this, Facebook generated $2.8 billion in free cash flow and ended Q2 with approximately $42 billion in cash and investments. Furthermore, the social media giant bought back approximately $3.2 billion of Class A common stock.

Expecting Similar Results in Q3 & Q4

The disheartening note at the Facebook 2018 Q2 earnings call was when Wehner warned similar growth pattern, to be precise, high single-digit decline percentage for the rest of 2018. The projections are made on the basis of global currency fluctuations visible in near future.

Facebook laid down ample of factors that contributed to the company’s declining performance. GDPR played an important role in the downfall of active users in the European region on the top of the Cambridge Analytica scandal.

The company also took major steps in refining the social media platform in terms of making its Pages and advertisements more Transparent. The team is updating its privacy terms at regular intervals.  The action has definitely hurt its major source of income, that is, ad revenues.

For 2019, COO Sheryl Sandberg put the spotlight on engaging and immersive experiences such as running business advertisements in Stories. The company is betting on the vertical format ads for increasing income flow.