Facebook Inc. (NASDAQ:FB) stock suffered the largest market cap drop in U.S. stock market history after the release of its second-quarter results on July 25. Earnings per share actually beat expectations in Q2 and rose to $1.74. However, Facebook reported that its global daily active users (DAUs) came in at 1.47 billion which was below consensus estimates.
Facebook and its founder and CEO Mark Zuckerberg have come under fire from various state organs and the mainstream media since the 2016 U.S. election. Zuckerberg eventually capitulated to this pressure and vowed to make changes to the platform to prevent "meddling" in the future. In the days following the release of its earnings Facebook announced that it had shut down so-called "inauthentic" groups, most of which were on the political left.
Facebook stock is now in negative territory for 2018 so far. Shares are still up 4.1% year over year. In truth, the reaction to earnings are overblown and investors should consider this a buy-low opportunity. Instagram, which is owned by Facebook, is still reporting massive growth.
The company also reported very attractive advertising metrics. User data has been stagnant in successive quarters, but this was forecast with the changes that are being made to the platform.
Facebook stock shed approximately $30 a share following the Cambridge Analytica scandal back in March. Shares bounced back in less than two months. Investors should feel confident in a similar rebound as we look ahead.
