Well, it couldn’t last forever.
Facebook’s investors have been brushing off the company’s political and privacy scandals since the 2016 US election. That was until Facebook chief financial officer David Wehner said on a second-quarter earnings call today (July 25) that those scandals would take an extensive toll on the company’s finances.
Facebook expects revenue deceleration “in the high single digits for the next couple of quarters,” Wehner said, responding to an analyst who asked about the company’s “fairly dramatic deceleration in revenue growth.” And Wall Street shuddered.
Facebook’s stock plunged by as much as 23% in after-hours trading, slashing more than $150 billion off the company’s market capitalization. That puts Facebook in danger of falling behind Berkshire Hathaway in the ranking of most valuable US companies. (It was ahead of Berkshire and behind Microsoft, with a market cap of $629.6 billion as of Wednesday’s close.)
Wehner attributed the slowdown to Facebook’s focus on promoting new features, as well as giving users “more choice around privacy,” and implementing changes required by the European Union’s General Data Protection Regulation.