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Photo illustration: Jaap Arriens/NurPhoto via Getty Images

Facebook stock was down double digits after hours Wednesday after the company reported that it missed revenue and user growth estimates for the second quarter and predicted it will continue to see slowed revenue growth in future quarters.

Why it matters: For months the tech giant seemed unstoppable, posting record earnings continually despite months of public relations fallout and product changes. Today's earnings show that product changes to address user privacy and engagement are starting to affect the company's bottom line.

"We expect our revenue growth rates to decline by high single digit percentages from prior quarters sequentially in both Q3 and Q4"
Facebook CFO David Wehner

Facebook CEO Mark Zuckerberg said that big investments in security will begin to affect the company's profitability. COO Sheryl Sandberg said that GDPR, the sweeping European privacy law that went into effect in May, didn't have a big impact on revenue.

By the numbers (missed):

  • Revenue: $13.23 billion vs. $13.3 billion expected
  • Monthly Active Users (MAUs): 2.23 billion vs. 2.25 billion expected
  • Daily Active Users (DAUs): 1.47 billion vs. 1.49 billion expected

By the numbers (hit/up):

  • EPS: $1.74 vs. $1.71 expected
  • Advertising: $13.04 billion, up 42% from $9,164 billion last year.
  • Mobile Advertising: ~91% of advertising revenue for the second quarter of 2018, up from ~87% of advertising revenue in the second quarter of 2017.

The news was surprising, given that the company's stock hit an all-time high just minutes before reporting earnings. Analysts were bullish earlier this week for two reasons:

  1. Google hit earnings Monday, despite some of the same problems also plaguing Facebook, like Europe's sweeping data privacy law that went into effect in late May and user privacy backlash this quarter around data-based advertising.
  2. The company has continued to meet investor expectations for the past year, despite many controversies, like a Russian meddling hearing on Capitol Hill.

Go deeper

Updated 47 mins ago - Health

First North American Omicron cases identified in Canada

COVID-19 testing personnel at Toronto Pearson International Airport in September. Photo: Steve Russell/Toronto Star via Getty Images

The first two cases of the new Omicron variant have been detected in North America, the Canadian government announced Sunday evening.

Driving the news: The World Health Organization has named Omicron a "variant of concern," but cautioned earlier on Sunday that it is not yet clear whether it's more transmissible than other strains of COVID-19.

Former Defense Secretary Esper sues Pentagon over book

Former President Trump and former Defense Secretary Mark Esper at the White House in 2020. Photo: Mandel Ngan/AFP via Getty Images

Former Defense Secretary Mark Esper filed a lawsuit Sunday against the Defense Department, accusing the Pentagon of "censoring" his First Amendment rights by redacting parts of his upcoming book on the Trump administration.

The big picture: Esper, who served as defense secretary from July 2019 until he was fired by then-President Trump in November last year, alleges in the suit that "significant text" is "being improperly withheld from publication" of the manuscript "under the guise of classification."

WHO warns against travel bans on southern African countries

Matshidiso Moeti, World Health Organization regional director for Africa. Photo: Sylvain Gaboury/Patrick McMullan via Getty Images

The World Health Organization called on countries Sunday to not impose travel bans on southern African nations amid concerns over the new COVID-19 Omicron variant.

Why it matters: The U.S. and countries in Europe and the Asia-Pacific announced travel restrictions in response to Omicron, which was first detected in South Africa. It's since spread to several European countries, Canada, Israel, Australia and Hong Kong. The WHO noted in a statement that only two southern African nations have detected the new variant.