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Home / US / Facebook profit beats despite backlash, stocks rise

Facebook profit beats despite backlash, stocks rise



Revelations about the misappropriated data of 87 million users have not affected the Facebook Inc. money machine.

The data privacy scandal with Cambridge Analytica broke out in mid-March, but the company seemed to shake off these worries with a huge profit and sales hit in the first quarter. In a Wednesday report, Facebook

FB, + 0.00%

posted $ 4.99 billion in quarterly revenue, with revenues of $ 11.97 billion, surpassing analyst estimates of $ 4.01

billion in net income and $ 11.41 billion in revenue ,

Challenges, our community and our business are starting well in 2018, "Chief Executive Mark Zuckerberg said in a teleconference Wednesday afternoon." … Over the next three years, we will continue to expand Facebook, not just a service to be what people like to use, but also something that is good for people and good for society. "

Facebook bumps more than 4% in after-hours trading following the release of the earnings report and after Conference Call Up 7% Before Wednesday's earnings, Facebook shares were down about 18% from their highs in February after closing at $ 159, and the share was up 9% this year as a benchmark S & P 500 index , 5% yielded

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fell 1.5%.

Head of Technology Research at GBH Insights Daniel Ives wrote in a statement to clients on Wednesday that the company's results are "solid" and that the company is calling earnings and earnings "the most significant initial win" for the stock as investors seek out Assess damage caused by the Cambridge Analytica Fallout.

See also: Facebook says you're NOT the product, but statement rejects privacy advocates

Facebook added 70 million users in the first quarter and exceeded expectations of user growth despite public calls to remove Social Media Media app met. The company now has 1.45 billion users per day and 2.2 billion members per month. The company's operating expenses were below consensus expectations, even though Zuckerberg warned that they will continue to use Facebook as 20,000 people are employed to address security and privacy issues.

According to the earnings release, Facebook increased its workforce by 48%. compared to 27,742 compared to the same quarter last year.

CFO David Wehner has cut back on some of that security and protection costs and told analysts that revenue and marketing growth was up 51% year-on-year driven by community operations investment. This unit includes part of the money the company spends on quality and security initiatives, and Wehner expects spending to "pull through the year."

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Earlier, executives said the cost-related security would spread across a number of companies rating cost items, including research and development and general administration, but no details are given.

Impressions, an important data point in terms of evaluating advertiser interest during the quarter, grew 8% and the price of ads grew by 39%. In the same period last year, Facebook increased impressions by 32% and ad prices by 14%. As Facebook's ads are in demand as the social network narrows supply, ad prices are on the rise – and if that happens and prices remain constant or lower, it's likely to signal weaker demand from advertisers.

However, most sales are skyrocketing, but investors are increasingly seeing potential massive revenue streams for the future in the emerging enterprise industries of Messenger and WhatsApp. Zuckerberg said the company did not consider these services as a means to pay for payments, but that messaging apps could "be more of a transactional medium than a feed."

Regarding what that might look like in the future, Zuckerberg said: "You can click or tap through a message thread, and then you can either get customer support or complete a transaction or follow-up transaction, and that will be very valuable to you Businesses. "

Read: Facebook is leaving the technology sector, and that could be good news for technology investors

Much of the legislature and public attention has been focused on the Cambridge Analytica scandal which broke out on March 17. Zuckerberg said only in early April that this has not yet materially impacted on the financial operations of the company.

But the changes announced earlier this year had a lot more time to play. In January, Zuckerberg said the company would give posts and other content from friends and relatives of its members a higher priority than material produced by third parties, such as news organizations, marketing companies and other for- and non-profit corporate websites. On Wednesday at least two analysts had asked Facebook managers if the time on the platform had changed due to the news feed changes. Executives did not answer the question directly.

In January, Zuckerberg warned investors: Facebook executives expected "some engagement measures" to fall and that the user base of 2 billion users would probably spend less time

as David Wehner at the Morgan Stanley technical conference in February in San Francisco was asked about the impact on the business world, the CFO of David Wehner told analysts that less time on the platform does not necessarily mean a corresponding decline in sales

"The impact of the business are much more subdued because we still see that there is a lot of post-engagement, "he said. "So if you take time away from things like passive video, that does not mean that you do not see that many posts in newsfeeds … I do not think the impact on the business is really that profound compared to the impact on time."

In contrast, the European data protection rules, which come into force on May 25, will affect Facebook. The company expects the number of monthly and daily active users in Europe to be flat or declining in the second quarter as DSGVO takes effect, but is not sure about the long-term effects.

Sheryl Sandberg, Chief Operating Officer, told analysts that the entire online advertising industry has to deal with the changes, and what the company is about are trends over time.

"We'll all know a lot more after we launch, but what does not change is the advertisers we're going to see the highest chance [return on investment]," Sandberg said. "And most importantly, winning budgets is the relative performance in the industry."


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