Facebook shares jump after quarterly results top estimates

January 31, 2019 09:30
Facebook expects total expenses this year to grow about 40 to 50 percent compared with 2018. Photo: Reuters

Facebook Inc. easily beat Wall Street’s profit estimates, soothing investor concerns that increased spending on the privacy of its users would blunt growth, Reuters reports.

Net income rose to US$6.88 billion, or US$2.38 per share, in the fourth quarter, up from US$4.27 billion, or US$1.44 per share, a year earlier. Analysts on average had expected earnings of US$2.19 per share, according to IBES data from Refinitiv.

Total fourth-quarter revenue rose 30 percent to US$16.9 billion from US$12.97 billion, compared to analysts’ average estimate of US$16.4 billion. 

Wednesday’s better-than-expected profit reassured investors that the company could keep growing, even after posting its slowest quarterly revenue growth in more than six years as a public company. 

Facebook shares rose nearly 12 percent to US$168.20 after the bell. They closed up 4.3 percent in regular trading.

“We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect,” Mark Zuckerberg, Facebook’s founder and chief executive, said in a statement. 

Total expenses in the fourth quarter surged to US$9.1 billion, up 62 percent compared with a year ago. The operating margin fell to 46 percent in the fourth quarter from 57 percent a year ago.

Facebook said on a conference call after reporting earnings that its total revenue growth rate this quarter would decelerate by mid-single digits, excluding currency fluctuations, compared to the fourth quarter, and would continue to slow down throughout the year.

It said it continued to expect 2019 total expenses to grow about 40 to 50 percent compared with 2018.

Despite its privacy issues, Facebook managed to gain some new users, particularly in India, Indonesia and the Philippines.

Facebook said more than 2.7 billion users interact with at least one of its apps each month, up from 2.6 billion last quarter.

Monthly and daily users of the main Facebook app compared to last quarter were up 2.2 percent to 2.32 billion and 2.0 percent 1.52 billion, respectively.

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