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Facebook crashes, Amazon reports earnings — What you need to know in markets on Thursday

Myles Udland
Markets Reporter

It was an ugly quarter for Facebook (FB).

After the market close on Wednesday, the social network reported quarterly results that disappointed as revenue missed expectations and user growth also slowed, sending shares of the company down sharply.

Facebook shares closed at a record high on Wednesday ahead of the results, but a more than 17% drop in shares had the stock trading at around $180 per share in extended trading.

Facebook reported earnings-per-share of $1.74 on revenues of $13.23 billion in the second quarter, with monthly active users totaling 2.23 billion. Analysts were expecting earnings-per-share of $1.72 on revenues of $13.3 billion with monthly active users hitting 2.25 billion. 

On the company’s earnings conference call, Facebook CEO Mark Zuckerberg said GDPR regulations in Europe led to a user decline on the continent.

But it was commentary from the company that its revenue growth rates could slow by “high-single digits” in the third and fourth quarter led to the company extended losses after hours. The company also said expense growth was likely to outpace revenue growth next year.

Facebook shares were getting clobbered after hours on Wednesday following discouraging guidance for future quarters. (Source: Yahoo Finance)

This week, the overall tech sector has been bolstered by strong earnings from Google parent company Alphabet (GOOGL) released after Monday’s close. And last week, investors shook off a poor quarter from Netflix (NFLX), which fell as much as 14% after hours.

We’ll see if Facebook’s quarter engenders a similar market reaction, particularly after the enthusiasm we from investors late Wednesday following President Donald Trump’s announcement that he had secured trade concessions from the EU.

On Thursday, investors will be inundated with corporate earnings as 74 members of the S&P 500 are scheduled to report results, with McDonald’s (MCD), MasterCard (MA), Southwest Airlines (LUV), Comcast (CMCSA), McKesson (MCK), Celgene (CELG), Under Armour (UAA), and American Airlines (AAL) all releasing earnings before the market open.

And alongside Amazon’s results after the close will be results from Starbucks (SBUX), Chipotle (CMG), Western Digital (WDC), Electronic Arts (EA), Expedia (EXPE), Intel (INTC), Lam Research (LCRX), and Amgen (AMGN).

But the main event with Amazon (AMZN), set to report earnings after the market close.

Investor focus will be on the company’s performance in its Web Services business, which analysts at Bloomberg Intelligence said will be a major boost to the company’s profitability, while third quarter guidance is likely to be strong after a solid Prime Day earlier this month.

According to estimates from Bloomberg, Amazon’s earnings per share should total $4.99 on an adjusted basis while revenues are expected to total $53.4 billion.

Amazon CEO Jeff Bezos (AP Photo/Ted S. Warren)

And on the economic data side, investors will get the weekly report on initial jobless claims, durable goods orders, for June, wholesale inventories for June, and the Kansas City Fed’s manufacturing activity index for July.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland