Facebook Shares Drop On Q2 Growth

Facebook has just released its earnings report for the 2nd quarter of 2018, and slowed growth for the social media platform is causing some concern regarding its future potential.

Although Facebook added another 22 million daily active users to its rolls during the second quarter, with 1.47 billion people (or 19.3% of the population of the world) logging in every day, and 2.23 billion people (29.3% of the world population) logging in monthly, people are starting to worry that the platform is going to be reaching saturation point soon, with everybody who can (or will) log in already almost doing so.

Slowest Growth Quarter Ever

Despite the numbers, this has been the slowest growth the company has ever had, and on the back of this news, shares in the social media platform fell by 20%.

In addition, for the first time ever, active users in European markets actually declined, leading to speculation that users are finally losing interest in the social network.

Revenue Growth Continues For Now

However, revenue, and specifically advertising revenue, has posted a 42% year-on-year increase as people continue to make use of the platform to reach potential customers.

Facebook has warned however that revenue will decline moving forwards, as the company begins to focus on growing newer products, while increased emphasis on user privacy will continue to affect both user figures, and revenue.

Should Mark Zuckerberg Back Off?

The question that both investors, and the industry itself, is asking, is whether the company can reverse the decline in user growth. The drop in the share price, wiping $120 Billion off Facebooks value in a single day, has given rise to calls that Facebook founder / owner / CEO Mark Zuckerberg should consider sharing more of his voting power, and appoint a more independent chairman of the board.

According to Calvert Research and Management Chief Executive Officer John Streur, “Facebook’s governance structure remains below industry standards, with a large amount of authority concentrated in the founder and CEO. Shareholder rights are not well respected, limited controls are in place around executive compensation, and concerns have been raised about the effectiveness of risk oversight, including privacy and security risk.”