Facebook Reports Weak Revenue Growth
October 30 2018 - 4:52PM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. recorded lower revenue than expected in the third
quarter as the social-media giant continues to adjust to slowing
growth rates.
Facebook's profits were higher than analysts had expected.
Following the results, the company's stock price rose more than 2%
to $149.38 in after-hours trading.
For the third quarter, Facebook reported earnings per share of
$1.76, up from $1.59 a year earlier, beating analyst projections of
$1.46 per share, according to data compiled by FactSet.
Revenue leapt 33% $13.73 billion, falling slightly short of
expectations of $13.77 billion.
Before Tuesday's earnings report, Facebook shares had fallen
about 20% year to date and about 34% since its last earnings report
in late July. The decline in shares is part of a larger pattern of
investors turning a cold shoulder to giant tech companies like
Google parent Alphabet Inc. and Amazon.com Inc., which posted
underwhelming sales growth last week.
This year marks perhaps the most difficult periods in Facebook's
nearly 15-year history. Critics have attacked the company's lax
data privacy practices, following Facebook's disclosure that it
provided user records to a third party, which then sold the
information to political analytics firm Cambridge Analytica.
Facebook also has been criticized for its failure to enforce its
content policies and allowing misinformation to infect its various
apps.
Facebook has said it previously moved too slowly to fix problems
underlying its platform and promised to fix these issues.
These problems have brought regulatory and government scrutiny,
and they've cut into Facebook's bottom line, as the company has
said it expects costs to rise and margins to fall in coming years.
Those shifts reflect Chief Executive Mark Zuckerberg's promise to
sacrifice profitability in order to shore up the platform,
stockpile video content and invest in advanced technologies like
artificial intelligence.
Facebook also is bracing for slower growth in its advertising
business, which currently collects the bulk of its revenue from ads
that appear in the Facebook news feed. Facebook warned that growth
would slow in the second half of the year, triggering a 35% decline
in its stock price since late July. The falling share price has
started to hit morale internally at Facebook, which has been
buffeted by two years of nearly relentless criticism about its
product and culture, according to current and former employees.
In the run-up to Tuesday's results, some advertisers said it
wasn't sustainable for prices to rise on news feed ads, especially
as more users embrace the Stories feature, which allows people to
post text, photo and video montages that vanish within 24 hours.
According to Credit Suisse, ads in Facebook Stories may cost about
half of those in the main news feed.
Facebook's turmoil has hit its executive ranks, where at least a
dozen senior or highly visible executives have left or announced
their departures since the fall of 2017.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
October 30, 2018 16:37 ET (20:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Apr 2024 to May 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From May 2023 to May 2024