Amid Capitol Hill hearings, shifts in the news strategy, promoting local content, kicking out Russian spies and banning bitcoin ads, Facebook managed to beat Q4 revenue expectations, with Revenue printing st $12.97BN, above the $12.55BN estimate, however EPS missed, coming in at $1.44, below the $1.95 expected as a result of the impact of tax provision on the company, which increased by $2.27 billion.

What is more concerning is that for the first time in years, facebook's Daily Active Users missed consensus expectations:

• Daily active users missed: at 1.40BN, just shy of the 1.41BN expected, an increase of 14% year-over-year
• Monthly active users in line: with expectations at 2.13BN, an increase of 14% year-over-year.
• Mobile advertising revenue – Mobile advertising revenue represented approximately 89% of advertising revenue for the fourth quarter of 2017, up from approximately 84% of advertising revenue in the fourth quarter of 2016.
• Capital expenditures – Capital expenditures were $2.26 billion and $6.73 billion for the fourth quarter and full year 2017, respectively.
• Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $41.71 billion at the end of the fourth quarter of 2017.
• Headcount – Headcount was 25,105 as of December 31, 2017, an increase of 47% year-over-year.

Facebook was also hit by the Trump tax cut:

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. As a result, our provision for income taxes increased by $2.27 billion and our diluted EPS decreased by $0.77 for both the fourth quarter and full year 2017. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be provisional due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions.

Commenting on the results, Zuckerberg said that "2017 was a strong year for Facebook, but it was also a hard one. In 2018, we're focused on making sure Facebook isn't just fun to use, but also good for people's well-being and for society. We're doing this by encouraging meaningful connections between people rather than passive consumption of content. Already last quarter, we made changes to show fewer viral videos to make sure people's time is well spent."

But more than the DAU and EPS miss, this is why the stock is tumbling after hours, from Zuckerberg.

"In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term."

In immediate reaction the stock is sharply lower, and is dragging the Nasdaq along with it.

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