Facebook’s financial results were followed by a conference call with investors, during which the company’s financial officer revealed that Facebook’s long run of growth was coming to an end.
David Wehner told his audience they should expect to see “revenue growth rates decline by high single-digit percentages” over the next six months.
He also said that profit margins would tighten and that billions of dollars would have to be spent on safety and security.
And at the other end of the phone, investors started reacting.
They decided to sell in their droves. In after-hours trading, Facebook’s share price fell off a cliff, at one point tumbling by nearly a quarter.
When the Nasdaq opened for real, the company’s value fell by $120bn (£92bn). Never before has so much value disappeared so rapidly.
On the face of it, this looks like a huge crisis for the world’s favourite social media network.
Not many companies can simply shrug off such a battering to their share price.
But then again, very few companies have achieved what Facebook has done in its short life.
In reality, this is a correction that Facebook will survive.
Indeed, the company might even have promoted it – an example of getting the bad news out in one chunk, to manage expectations.
After months where the share price had frothed upwards, this feels like a return to a more sanguine appraisal.
Facebook has some big challenges to face. For one thing, it has saturated its main markets – America and Europe.
In North America, it has 241 million regular users, a number that has gone up by just 2% over the past year.
In Europe, the number of users actually fell over the past three months, probably as a result of new privacy rules.
Its new users are coming from the rest of the world, and they’re coming in their hundreds of millions.
But the problem is that, to be blunt, they’re not worth all that much. The average American Facebook user generates more than $26 (£19.80) in revenue.
In Europe, they’re worth more than $8 (£6) apiece. As for the rest – maybe a couple of bucks per head.
Then there’s the reputational damage that came from the Cambridge Analytica scandal, the wider links to Russian election meddling, the debate around “fake news” and the general irritation that users felt with viral videos that appeared, unwanted, on their news feeds.
Facebook discovered that, while people might watch click-bait, they also find it annoying and unsatisfying.
So Facebook is investing in three S’s – security, safety and Stories – user-generated collections of photos and videos that disappear after 24 hours.
All three require big money, and are likely to bring in steadier, but less spectacular, returns.
“We’re investing so much in security that it will start to impact our profitability,” said founder Mark Zuckerberg.
“We run this company for the long term, not for the next quarter.”
That, of course, is a wise strategy for any company.
The trouble for Facebook is that the vision of the long term has not always been obvious or even remotely predictable.
Hands up anyone who foresaw that a foreign nation would try to use Facebook to influence overseas elections? Or that fake news would become such a political battleground?
Facebook, which has become a ubiquitous provider of information, has found itself at the heart of some pretty bitter disputes.
So perhaps it is wise to re-think and re-set. Investors may not like it, but Zuckerberg’s words about long-term value are smart.
And, of course, Facebook the company is about more than just Facebook the brand – it also owns Instagram, WhatsApp, Oculus VR and plenty of other clever online start-ups.
Like a legion of companies over the centuries, Facebook has diversified, and spread its risk across a sector.
Facebook’s share price plunged after the privacy scandal, and then recovered.
It may take longer this time, but it’s hard to believe that Facebook has suffered profound damage through this announcement.
A shock to the markets, sure; a bout of honesty that was more brutal than expected – no doubt.
But insurmountable problems?
Surely not. Few get rich by betting against Facebook.