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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

24 mins ago - World

South Korean president: Trump "beat around the bush and failed" on North Korea

South Korean President Moon Jae-in speaking in Seoul in March 2021. Photo: Jeon Heon-Kyun/POOL/AFP via Getty Images

South Korean President Moon Jae-in criticized former President Trump's attempts to denuclearize the Korean Peninsula, telling the New York Times he "beat around the bush" with North Korea and "failed to pull it through."

Why it matters: Moon, now in his final year in office, called denuclearization a "matter of survival" for South Korea and urged President Biden to resume negotiations with North Korean leader Kim Jong-un after a standstill of nearly two years.

39 mins ago - World

U.S.-Israel tensions build as Iran talks progress

Photo illustration: Aïda Amer/Axios. Photos: Eric Baradat (AFP), Gali Tibbon (AFP)/Getty Images

As nuclear talks in Vienna enter a critical stage, the gaps and suspicions over Iran between the Israeli government and the Biden administration are growing.

Why it matters: Both sides want to avoid the kind of public fight that emerged during the negotiations over the 2015 deal. But in private, there's growing frustration on both sides about the lack of trust, coordination and transparency.

58 mins ago - Politics & Policy

Cadillac's electric shift begins with launch of 2023 Lyriq SUV

2023 Cadillac Lyriq. Photo: GM

GM plans to start taking orders in September for the 2023 Cadillac Lyriq, a striking electric SUV coming early next year at a starting price of $59,900.

Why it matters: The production version of the Lyriq, which debuted Wednesday, marks the beginning of the luxury brand's phaseout of gasoline-powered vehicles by 2030.