Facebook's string of screwups may eventually return to hurt the company where it counts – its user growth.
The social media giant reported the second quarter results on Wednesday, revealing that it is no longer growing in the United States and Canada, by far the most valuable geographical area in Facebook. It has also added only 22 million new daily active users worldwide, the lowest quarter of a quarter over the jump since at least the beginning of 2011, as we first have data on metric.
Facebook has 185 million users for the United States and Canada – the same as the previous quarter. There are four straight quarters that there have been about 185 million users. It also lost users in Europe for the first time. Facebook reported 279 million daily active users in Europe in Q2, down from 282 million users in Q1.
The global decline in user growth is scary if you are Facebook. The company has been hit by scandal after scandal over the last 18 months, but has so far not seen any impact on user growth or income. Wednesday's earnings report appears to show that these scandals can finally come into contact with the company.
Growth platforms in the US and Canada are also bad news, but it makes sense. About half the entire population in the US and Canada uses Facebook every day, and it includes all from infants to members of the United States largest generation. In the end, you only get to a saturation point, and Facebook seems to have found it.
But there are also bad news for Facebook investors, first and foremost because this user group is so valuable to the company. Average US and Canada users made Facebook $ 25.91 in revenue last year, almost three times the revenue from users in the second most valuable region, Europe.
It's unknown why Facebook finally has the plateau. Is it because it adds new users at the same rate as desertors? Or has Facebook stopped appealing to young Internet users coming online for the first time? (It's probably a combination of both.) In either case, equalization in the US and Canada means that Facebook's growth comes elsewhere – in markets where the company can not earn so much money from ads.
The rest of Facebook's performance report was also not great. The company missed income rash, albeit a little, and the shares were down at more than 8 per cent in early demand.