Facebook Profit Jumps 79%, Revenue Up
November 01 2017 - 5:08PM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. said third-quarter profit jumped 79% on its
continued dominance in online advertising, though the social media
giant's aggressive pursuit of growth drew scrutiny Wednesday from
lawmakers investigating alleged Russian propagandists' activity on
Facebook.
The company reported a third-quarter profit of $1.59 a share,
compared with the $1.28 projected by analysts polled by Thomson
Reuters, and up from 90 cents per share a year ago. The company
also generated $10.33 billion in revenue, more than the $9.8
billion analysts predicted and up from $7.01 billion in the prior
year's quarter.
The earnings report came as the social-media company's general
counsel, Colin Stretch, faced tough questions on Capitol Hill over
alleged Russian manipulation of Facebook at the time of the U.S.
election. During the hearings, which took place Tuesday and
Wednesday, lawmakers grilled Mr. Stretch and executives from
Twitter Inc. and Alphabet Inc.'s Google over their ad-targeting
capabilities and content policies.
Facebook has responded to the crisis by promising to hire
workers, which some analysts say could significantly boost the
company's costs at a time when the company is already pursuing a
costly drive into video.
"We're investing so much in security that it will impact our
profitability. Protecting our community is more important than
maximizing our profits," Chief Executive Mark Zuckerberg said in
the company's earnings release.
The firestorm hasn't hurt Facebook's popularity. The company
grew its monthly active user base 16% to 2.07 billion.
Facebook shares were up 0.9% in after-hours trading. The stock
price is up more than 59% this year through Wednesday's close.
The grilling by lawmakers raises the specter of regulation and
added scrutiny, which could slow Facebook's growth and ability to
rapidly develop new products. The crisis has also put Facebook in
the awkward position of playing down the effectiveness of the
Russian ads while touting the strength of its ad-targeting and
reach to legitimate advertisers.
Since the 2016 U.S. presidential election, Facebook has faced
immense criticism for allowing misinformation, propaganda and
violent videos to spread on its service as its growing power shapes
political discourse around the world.
Facebook reinvigorated the debate two months ago after it
disclosed that Russian-linked Facebook accounts bought thousands of
ads that sought to inflame social and political tensions before and
after election. This week, the company said 146 million people saw
at least one post from Russian-linked accounts on Facebook and its
photo-sharing service Instagram from early 2015 to mid-2017.
The company has allocated a budget of as much as $1 billion to
cultivate original shows for its platform, The Wall Street Journal
has reported.
On Tuesday, Mr. Stretch said Facebook plans to double the number
of employees working on safety and security to 20,000 by the end of
2018. In October, Facebook said it would hire 1,000 new workers to
review ads and ensure they comply with its policies. That's in
addition to the 3,000 content reviewers that Facebook previously
promised to hire after a rash of violent videos on the site.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
November 01, 2017 16:53 ET (20:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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