Facebook shares dived nearly 20% in opening trade on Wall Street today after it signalled it expects weaker growth.
Investors fled Facebook after the social network reportedly sharply higher profit and revenue, but signaled it expects slower user growth, partly due to the effect of data privacy scandals.
Facebook chief executive Mark Zuckerberg also cautioned that profitability would be hit by additional spending to secure the network.
Facebook last night said its profit was up 31% in the second quarter at $5.1 billion as revenues rose 42% to $13.2 billion.
But the quarterly report was largely weaker than had been expected.
"Our community and business continue to grow quickly. We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect," Mark Zuckerberg said.
Zuckerberg has said he did not expect a meaningful impact from the uproar over data hijacked by political consulting firm Cambridge Analytica, but the last quarter's figures suggested some cooling.
The key metric of monthly active users rose 11% to 2.23 billion, below most estimates of 2.25 billion, while daily active users grew a weaker-than-expected 11% to 1.47 billion.
Almost all of Facebook's revenue - $13 billion of the total $13.2 billion - came from online advertising, a sector dominated by the California social network along with Silicon Valley rival Google.
Although Facebook shares were in a slump after the Cambridge Analytica scandal broke earlier this year, the stock had risen sharply and hit record levels this month.
According to the research firm eMarketer, Facebook is expected to hold an 18% share of the $273.29 billion worldwide digital ad market, behind Google's 31%.
EMarketer said that Facebook-owned Instagram is making up for some of the slowdown in growth at social network and will generate $8.06 billion in worldwide ad revenue this year.
