Mark Zuckerberg, added that the trajectory was not likely to improve anytime soon, especially as Facebook spends to improve the privacy and security of users.
His fortune tumbled by $16.8 billion in late trading Wednesday, as shares of the social media giant slid 20 percent at 5:37 p.m.in NY on disappointing results. Fourteen analysts surveyed by Zacks expected $13.43 billion.
Facebook Inc saw the first signs of user disenchantment in the midst of public scandals over privacy and content, with second-quarter revenue and average daily visitors missing analysts' projections. Analysts were generally expecting earnings-per-share of $1.72 on revenues of $13.3 billion.
Facebook has been struggling for years with criticism about its content policies, its failure to safeguard private data and its changing rules for advertisers.
The proximate cause was the company's disclosure its revenue rate growth will slow precipitously in the current quarter and the next one.
The magnitude of erosion of $120 billion can be understood if we compare it to other companies in the market: Facebook lost two Tesla in the after hour trade, i.e. within four hours. The company displayed mixed results in its Q2 2018 earnings and this can be contributed to the GDPR, Zuckerberg's testimony before Congress, as well as more scandals that might have contributed to Facebook's weak user growth for this quarter.
It's the first time Facebook missed an earnings report since 2015.
The company remains in a dominant position in mobile advertising alongside Alphabet Inc's Google. Wehner said the drop was due entirely to a data protection and privacy law that took effect in Europe in May known as the General Data Protection Regulation, or GDPR.
Facebook Chief Financial Officer David Wehner told investment analysts on a conference call that the company's operating margin, a key measure of profit, would trend toward the "mid-30s" over the next several years, down from 44 percent in the quarter that ended June 30.
The fleeing of one million users is but a drop in the ocean to Facebook, which now has over 2.2 billion active monthly over-sharers on its website.
Facebook warned that a slowdown in revenue growth will continue through the second half of 2018, with expenses soaring 50% to 60% year over year.
The company earned $5.1 billion, or $1.74 per share, up 31% and above analysts' estimates of $1.71. The company owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram.
Shares in the technology company and publisher plunged by nearly 25 per cent in late trading after David Wehner, chief financial officer, said that Facebook's revenue growth would decelerate in the second half of the year and expenses would soar in 2019.
That places Zuckerberg, who had been the world's third-richest person, at No. 6, below billionaires including Berkshire Hathaway's Warren Buffett, French business magnate Bernard Arnault, and Zara founder Amancio Ortega.