Facebook’s Share Rise despite Reports of Slow Growth

Andrew Cummings
November 3, 2018

The earnings report followed a hard 18 months for the firm, which has been under scrutiny for spreading disinformation, hate speech and leaks of user data.

Still, the company had warned about sagging profit and revenue growth.

Zuckerberg and others had vowed that Facebook would change to deal with those problems. Facebook also told investors to expect increased expenses in 2019. Chief Financial Officer David Wehner also calmed concern about costs next year and quarterly earnings from the company suggested its business is holding up in the wake of scandals and privacy breaches.

"Let's not ignore the big data point here: 1.49 billion daily active users equals nearly one-fifth of the world's population, giving the social media company wide-reaching impact", she told CNN Business. Facebook has said it formed a "war room" to prevent disinformation and election meddling from foreign operatives through its site.

CEO Mark Zuckerberg called 2019 "another year of significant investment" during the earnings call.

For the third quarter, Facebook said its revenue rose 33 per cent to $US13.7 billion and profit increased 9 per cent to $US5.1 billion from a year earlier, roughly in line with what Wall Street had expected. But operating margin fell only 2 percentage points from last quarter, to 42 percent.

The social network reported earnings per share of $1.76, compared to a consensus estimate of $1.47 cited by CNBC.

However, total global user numbers continue to slowly rise, with more than 2.2 billion people using the platform every month.

The company continues to grapple with privacy issues in the aftermath of the Cambridge Analytica scandal and the proliferation of disinformation.

Facebook reported DAU growth in its least profitable markets - those outside the USA and Canada and Europe.

In related news, Facebook is still looking for ways to send its assault against Twitch, as the social media giant has expanded its Level Up Program to game streamers around the world.

In what could wind up costing Facebook more money, British Finance Minister Philip Hammond said he planned to introduce a digital services tax aimed at tech giants from 2020, responding to public outrage over low tax payments by USA tech giants. The fourth quarter is still a big quarter for Facebook, as more people are on the platform talking to friends and family they won't see during the holidays, as well as kids being home from school and having nothing to do.

While messaging apps may be just one part of Facebook's business, it is a very important part. Regardless, Zuckerberg said he believes the opportunity with stories "will be bigger" than that of the News Feed, the scrolling wall of posts from friends that has dominated most Facebook users' experience for years. Meanwhile, developing ads for stories "will take some time", he said.

Every month, Facebook now estimates that roughly 2.6 billion people use its flagship property, along with WhatsApp, Instagram, and Messenger, while about 2 billion visit at least one of those properties daily. That is purely why Mark Zuckerberg doesn't take security all that seriously, and it's going to take Congress to straighten him out.

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