Facebook suffers biggest one-day rout ever as shares tumble 19% – as it happened

Facebook dropped two “bombshells” on the Q2 earnings call, a significant slowdown in revenue growth for Q3/Q4, followed by operating margin declines over the next 3+ years.

Importantly, these are “self-inflicted” issues to a large degree, as Facebook sacrifices core app monetization to drive usage/engagement of Stories.

Lower margins will result from continuing large-scale investments in computing infrastructure and headcount, but without meaningful related revenue streams. While shares are moving to the “penalty box,” we believe after-hours trading already embeds model changes. Maintain Outperform rating.


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