Date
20 July 2017
Facebook will create a new class of non-voting shares that will allow chief executive Mark Zuckerberg to give away his wealth without relinquishing control of the company. Photo: Bloomberg
Facebook will create a new class of non-voting shares that will allow chief executive Mark Zuckerberg to give away his wealth without relinquishing control of the company. Photo: Bloomberg

Facebook revenue smashes expectations as mobile ad sales surge

Facebook Inc. said quarterly revenue rose more than 50 percent, handily beating Wall Street expectations as its wildly popular mobile app and push into live video lured new advertisers and encouraged existing ones to boost spending.

The company’s shares rose 9.5 percent in after-hours trading on Wednesday to US$118.39, setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago, Reuters reports.

Facebook also announced it will create a new class of non-voting shares in a move aimed at letting chief executive Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded.

The company plans to create a new class of non-voting shares, which would be given as a dividend to existing shareholders, the news agency said.

That would allow Zuckerberg, who wants to give away 99 percent of his wealth, to sell non-voting stock to fund philanthropy and keep the voting stock that assures his control, the report said.

Alphabet Inc. passed a similar proposal in 2014 that ensured its founders’ control by creating new non-voting shares.

Some 1.65 billion people used Facebook monthly as of March 31, up from 1.44 billion a year earlier.

Zuckerberg said users were spending more than 50 minutes per day on Facebook, Instagram and Messenger, a huge amount of time given the millions of apps available to users.

Advertisers are shifting money from television to web and mobile platforms and Facebook is one of the biggest beneficiaries.

It faces fierce competition in the mobile video market, where rivals Snapchat and YouTube also garner billions of video views every day.

Facebook recently expanded its live video product, rolling out several new features and making it more prominent on the app to encourage users to create videos and share them. 

The quarterly results showed the company’s success in attracting advertisers with the move, and it was able to expand its operating profit margin to 55 percent from 52 percent a year earlier.

“The company consistently ‘warns’ about higher spending, but they consistently manage their spending to deliver earnings upside. They’re an impressive company, and they leave very little room for criticism,” said Wedbush Securities analyst Michael Pachter, who called the operating margin a good surprise.

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