Facebook’s string of screwups may finally be coming back to hurt the company where it counts — its user growth.
The social media giant reported second-quarter earnings on Wednesday, revealing that it is no longer growing in the United States and Canada, by far Facebook’s most valuable geographic region. It also added just 22 million new daily active users worldwide, its lowest quarter-over-quarter jump since at least early 2011, when we first have data on the metric.
Facebook has 185 million users for the U.S. and Canada — the same as it had last quarter. That’s four straight quarters that it’s been stuck around 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.
That global slowdown in user growth is terrifying if you’re Facebook. The company has been hampered by scandal after scandal for the past 18 months, but until now, it hasn’t seen an impact on user growth or revenue. Wednesday’s earnings report appears to show that those scandals may finally be catching up with the company.
The growth plateau in the U.S. and Canada is also bad news, though it makes sense. About half of the entire population of the U.S. and Canada use Facebook every day, and that includes everybody, from infants to members of America’s Greatest Generation. Eventually, you just reach a saturation point, and Facebook seems to have found it.
But it’s also bad news for Facebook investors, primarily because this user group is so valuable to the company. The average user in the U.S. and Canada made Facebook $25.91 in revenue last quarter, almost three times the revenue generated by users in the next most valuable region, Europe.
What’s unknown is why Facebook has finally plateaued. Is it because it’s adding new users at the same rate as deserters? Or has Facebook stopped appealing to young internet users coming online for the first time? (It’s likely a combination of both.) In either case, leveling off in the the U.S. and Canada means that Facebook’s growth is coming elsewhere — in markets where the company can’t make as much money from ads.
The rest of Facebook’s earnings report wasn’t great, either. The company missed on revenue projections, albeit slightly, and the stock was down more than 8 percent in early after-hours trading.