Facebook’s earnings beat expectations – but the share price goes down
Social network kingpin Facebook reported third quarter earnings for 2017 this week, easily beating analysts’ expectations. Nonetheless, shares in the company fell by 2% in after-hours trading, as Facebook’s chief financial officer David Wehner said that operating expenses would increase between 45% and 60% next year.
Facebook’s share price has appreciated by 55% in 2017 so far
SOURCE: Yahoo Finance
Facebook reported a impressive 47% rise in revenue for the third quarter against the same period last year. That bought it up to $10.3 billion – a clear beat over Wall Street’s expectations of $9.84 billion. The company also overshot on earnings, reporting earnings of $1.59 per share against consensus estimates of $1.28 per share.
Despite these big beats, Facebook’s share price slumped slightly in after-hours trading, and the company’s founder and CEO Mark Zuckerberg warned that tackling hate speech and fake news wouldn’t come cheap. He told investors: “we’re serious about preventing abuse on our platforms. We’re investing so much in security that it will impact our profitability.”
On the company’s conference call, Mr. Zuckerberg said that this was, ultimately, “more important” than boosting profit, and Mr. Wehner said it would come with a 45% to 60% increase in operating expenses.
Facebook’s advertising business continues to go from strength to strength. Third quarter ad sales rose by 49%, year on year, to $10.1 billion, and 88% of those sales came from mobile ($8.9 billion). According to the company’s chief operating officer, Sheryl Sandberg, Facebook now has 6 million active advertisers, and Instagram has 2 million. Monthly average users are also continuing to rise, and Facebook now boasts 2.07 billion – more than the population of any single continent other than Asia.
Dominion holds Facebook in its Global Trends Ecommerce Fund.
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