Facebook Shares Shine As User Base Keeps Growing

facebook earnings

Facebook Inc (NASDAQ: FB) has endured a staggering number of controversies and scandals in the last twelve months, from its role in spreading hate speech that triggered genocide in Myanmar to the Cambridge Analytica saga. But investors have stuck with the social media company even as its problems continue to grow.

On Wednesday evening, its shares climbed $13.35, or 7.31% to 195.93 after the company posted first quarter revenue that exceeded Wall Street’s expectations. That is despite the California-based company saying that it expects to take a one-time charge of as much $5 billion because of an ongoing Federal Trade Commission probe.

FB stock, which has gained more than 14% in the last 12 months, ended Wednesday with a 0.7% loss at $182.58.

FB Earnings & Outlook

Facebook reported net income of $2.43 billion, or $0.85 per share in the first quarter, compared with earnings of $1.69 per share in the same period last year. Excluding the expected FTC fine, net income would have been $5.43 billion, or $1.89 per share. On average, analysts surveyed by Refinitiv had been calling for adjusted earnings of $1.63 per share in the quarter.

The company pulled in $15.08 billion in revenue, an 26% increase from $11.97 billion in the same quarter a year ago. Analysts were expecting social media giant to come out with first quarter revenues of $14.98 billion based on figures compiled by Refinitiv.

Daily active users were pegged at 1.56 billion, up 8% from last year and in line with analyst forecasts while monthly active users stood at 2.38 billion, also roughly in line with analyst estimates. Average revenue per user was $6.42 while analysts’ consensus was $6.39.

Facebook CEO Comments

“We had a good quarter and our business and community continue to grow,” said Mark Zuckerberg, Facebook founder and CEO. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”

Facebook Inc Profile

Facebook Inc is the world’s largest online social network, with more than 2 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos. On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Facebook refers to this as Facebook Watch.

The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktop. Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada, and 25% from Europe. With gross margins above 80%, Facebook operates at a 40%-plus margin.