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VOL. 42 | NO. 29 | Friday, July 20, 2018

Facebook reports slower-than-expected 2Q revenue growth

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NEW YORK (AP) — Facebook's user base and revenue grew more slowly than expected in the second quarter as the company grappled with privacy issues, sending its stock tumbling after hours.

The earnings covered the company's first full quarter since the Cambridge Analytica privacy scandal erupted. But analysts attributed the user growth shortfall largely to European privacy rules that went into effect in May, not to the furor over the political consulting firm with ties to President Donald Trump, which improperly accessed the data of tens millions of Facebook users.

Shares fell 7.6 percent in after-hours trading after closing at $217.50.

The results suggest that Facebook may have weathered the scandal without major harm to its business, even if its public image has taken a hit. While its revenue fell short of Wall Street estimates, it did so by only about 1 percent; profits, meanwhile exceeded forecasts.

Earlier on Wednesday, Facebook's stock hit a record high.

But Facebook continues to grapple with big existential questions, ranging from its users' privacy to tech addiction to how it deals with fake news and misinformation, hate speech and extremism on its service.

At times, it has seemed as though Facebook can't quite decide where its values really lie. For instance, it continues to straddle the line between policing what users say and remaining a neutral platform in an increasingly divided world, and between protecting privacy while collecting as much information on its users as possible.

Facebook had 2.23 billion monthly users as of June 30, up 11 percent from a year earlier. Analysts were expecting 2.25 billion, according to FactSet. User growth — both on a monthly and daily basis — was flat in the U.S. and the rest of North America, while it declined slightly in Europe.

Facebook has largely saturated in the U.S. and Western European markets, and is now looking to countries such as Brazil, India and Indonesia for new users. Revenue from these regions, however, is far below what Facebook rakes in from the U.S. and Europe.

The company earned $5.1 billion, or $1.74 per share, up 31 percent and above analysts' estimates of $1.71.

But revenue — up 42 percent to $13.23 billion— was slightly below the $13.34 that Wall Street was expecting.

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