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Facebook forecasts slowing growth, rising expenses sends stock down 19 pct

Big climb in costs expected

FILE PHOTO: Facebook logo is seen  at a start-up companies gathering at Paris' Station F in Paris, France on January 17, 2017. REUTERS/Philippe Wojazer/File Photo
FILE PHOTO: Facebook logo is seen at a start-up companies gathering at Paris' Station F in Paris, France on January 17, 2017. REUTERS/Philippe Wojazer/File Photo

Facebook on Wednesday warned of slowing revenue growth in the second half and said that expenses would grow faster than revenue next year, sending shares down 19 percent over concerns about the impact of privacy issues on the social media company’s business.

The company had cautioned investors to expect a big jump in costs because of efforts to address concerns about poor handling of users’ privacy and to better monitor what users post. Total expenses in the second quarter surged to $7.4 billion.

Growth in new users slowed with Facebook adding 11 percent more daily and monthly active users on the main Facebook app in the second quarter, compared with 13 percent in the first quarter.

A data privacy scandal involving the political consulting firm Cambridge Analytica and misinformation on WhatsApp contributing to mob killings in India have added to the pressure on Facebook to re-evaluate how its services maintain security and decorum.

The Cambridge Analytica scandal prompted several apologies from CEO Mark Zuckerberg and generated calls for users to desert Facebook, which has grown strongly since launching as a public company in 2012.

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