Facebook and CEO Mark Zuckerberg have had a rough year so far.
They've been playing whack-a-mole in the fight against election meddling by Russia and Iran, waged a near-constant battle against fake news and faced a string of controversies over data misuse. Hackers got ahold of the personal data of 29 million Facebook users during a massive security breach. Meanwhile, the world's largest social network is having a tough time stamping out hateful posts. On Monday, The New York Times said it found 11,696 anti-Semitic posts on the company's Instagram photo-sharing site, two days after a gunman killed 11 people in a Pittsburgh synagogue.
"The upcoming elections will be a real test of the protections we've put in place," Zuckerberg said during a conference call on Tuesday after the tech firm released its third-quarter earnings. "With a community of more than 2 billion people, we will see all the good and bad that humanity can do, and we will never be perfect."
Then there's the recent wave of high-level departures, as top executives from Instagram, WhatsApp and Oculus -- all companies Facebook has acquired -- head for the exits. The departures indicate that Zuckerberg is taking tighter control over those businesses, potentially placing ad sales over user privacy.
Facebook's string of scandals is taking a toll on the tech firm's business.
Things first showed signs of cracking in July, when the company reported second-quarter sales below Wall Street estimates, gave a weak revenue forecast for future quarters and said the number of users in Europe had declined. The news sent Facebook's stock free-falling nearly 25 percent in after-hours trading. The next day, falling share prices wiped out more than $100 billion of Facebook's market value. By the close of trading, Bloomberg declared that Facebook had suffered the largest stock market loss in value during a single day ever for any US company.
The company's bad news continued Tuesday, when Facebook reported that revenue rose 33 percent, to $13.72 billion, during the third quarter, shy of Wall Street's average estimate of $13.78 billion. Citing FactSet, The Wall Street Journal reported the percentage increase was the lowest in six years.
Facebook also said it had 2.27 billion monthly active users as of Sept. 30. Analysts on average had estimated 2.29 billion users, according to Reuters. The social network lost 1 million users in Europe, where the company makes more money from ads compared with other parts of the world. Profit was $1.76 a share. Analysts had anticipated $1.47 a share.
Facebook executives said they expect revenue growth to slow down again in the fourth quarter as more users post their content in "Stories," a Snapchat-like feature where photos and videos vanish in 24 hours.
"Our efforts to shift Facebook from NewsFeed first to Stories first hasn't been as smooth as I've hoped," Zuckerberg said on the call. "We're earlier in developing our ad products for Stories, so we don't make as much money from them yet as we do from Feed ads."
The tech mogul said he's hopeful Facebook's ad sales will eventually be back on track.
"I'm optimistic that we'll get ads in Stories to perform as well as Feed over time, and the opportunity will be even bigger."
First published Oct. 30, 1:22 p.m. PT
Update, 4:08 p.m.: Adds information from the earnings call.
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