July 26 (NBD) -- The U.S. social media giant Facebook posted its second-quarter earnings report of 2018 after the closing bell Wednesday. The stock of the company plunged by over 20 percent during after-hours trading. 

The share price drop is mainly led by unsatisfying financial results as well as slower increase of daily active users (DAUs) in the second quarter. The company reported revenue of 13.23 billion U.S. dollars, surging 42 percent compared to the same period of last year, but lower than analysts' average estimate for the first time since 2015. It's noted that FactSet Research Systems analysts gave a forecast of 13.34 billion U.S. dollars. 

Statistics from the U.S. media TechCrunch show that DAUs of Facebook totaled 1.47 billion on average in June this year, up 11 percent compared with June 2017. The website's monthly active users registered 2.23 billion in number as of June 30 of 2018, which also represents a year-over-year increase of 11 percent. 

However, the number of Facebook's DAUs posted a record low quarter-on-quarter increase. European DAUs even declined to 279 million from 282 million last quarter, potentially related to the effect of the enactment of the General Data Protection Regulation in the European Union.

In March this year, British data analysis firm Cambridge Analytica, which worked for Trump's 2020 reelection campaign, reportedly to have collected personally identifiable information of 87 million Facebook users.

On April 6, Facebook informed the European Commission that a total of 2.7 million EU citizens have been the victim of the improper data sharing involving Cambridge Analytica.

Mark Zuckerberg, CEO of Facebook, attended U.S. Senate hearing and EU parliament hearing separately in April and May.

While struggling with Cambridge Analytica data scandal, Facebook is seeking to make inroads into Chinese market. 

The company was reported on Wednesday to found a wholly-owned company in China through its Hong Kong subsidiary. With a registered capital of 30 million U.S. dollars, the new company will be located in east China's Hangzhou, home to e-commerce giant Alibaba Group.

A spokesperson at Facebook said the company was also looking to set up an innovation hub in Zhejiang, which will focus on training and workshops that will help developers and entrepreneurs to innovate and grow.

Upon the news, Facebook-related stocks soared on Wednesday.

Shares of Blue Focus Intelligent Communications Group Co Ltd, an advertising agent for Facebook in China, jumped by daily limit of 10 percent on the Shenzhen Stock Exchange to 5.89 yuan (87 cents), marking one of its best days in half a year.

Sichuan Xunyou Network Technology Co Ltd and Shenzhen Zhongqing Game, which conduct business with Facebook, also saw their shares skyrocket by the 10 percent limit on the same day.

Email: zhanglingxiao@nbd.com.cn