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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 4 hours ago - World

Over 3,000 detained in protests across Russia demanding Navalny's release

Russian police officers beat protestesters at a rally against of jailing of oppositon leader Alexei Navalny in Moscow on Saturday. Photo: Mikhail Svetlov/Getty Images

Police in Russia on Saturday arrested more than 3,300 people as protesters nationwide demanded that opposition leader Alexey Navalny be released from jail.

Details: Demonstrations began in the eastern regions of Russia and spread west to more than 60 cities.

Updated 5 hours ago - Politics & Policy

Arizona Republicans censure Cindy McCain and GOP governor

Combination images of Cindy McCain and Gov. Doug Ducey. Photo: FilmMagic/FilmMagic for U.S.VETS/Michael Brochstein/SOPA Images/LightRocket via Getty Images

Arizona Republican Party members voted on Saturday to censure prominent GOP figures Cindy McCain, Gov. Doug Ducey and former Sen. Jeff Flake (R-Ariz.), who've all faced clashes with former President Trump.

Why it matters: Although the resolution is symbolic, this move plus the re-election of the Trump-endorsed Kelli Ward as state GOP chair shows the strong hold the former president has on the party in Arizona, despite President Biden winning the state in the 2020 election.

Updated 9 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Education: Schools face an uphill battle to reopen during the pandemic.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong puts tens of thousands on lockdown as cases surge — Pfizer to supply 40 million vaccine doses to lower-income countries — Brazil begins distributing AstraZeneca vaccine.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.