Facebook Share Price Falls Despite Blowout Quarter

...

Facebook on Wednesday reported a record Q3, beating analysts' expectations for the fourth straight quarter, but concerns among investors about increased expenditures and the company's future prospects drove down share prices.

They closed Thursday at US$119.95, down more than $7 from Wednesday's closing price of $127.17. Friday saw little movement, with a closing price of $120.75.

Facebook posted adjusted earnings of $1.09 per share on revenue of more than $7 billion for the quarter, compared with 57 cents per share and $4.5 billion in revenue in Q3 2015.

Mobile ad revenue amounted to $57 billion -- about 84 percent of the firm's ad revenue in Q3 2016, compared with 78 percent in Q3 2015.

Monthly active users (MAUs) increased 16 percent year over year to a total of 1.79 billion. Mobile MAUs increased 20 percent year over year for a total of 1.66 billion.

Daily active users (DAUs) increased 17 percent YoY to 1.18 billion on average, and mobile DAUs averaged 1.09 billion, a 22 percent increase over year-ago figures.

Analysts had expected revenue of about $6.9 billion, adjusted earnings per share of 92 cents, 1.76 billion MAUs and 1.16 billion DAUs.

The company is "making progress putting video first across our apps and executing our 10-year technology road map," said CEO Mark Zuckerberg.

Facebook's ad load -- the number of ads that can be placed in the News Feed -- is expected to fall "meaningfully" after mid-2017, CFO David Wehner told investors, and revenue growth could decline in Q4 this year.

Facebook plans to hire aggressively and invest in expanding its data centers. It expects to grow capital expenditures substantially as it executes its 3-, 5- and 10-year road maps, Wehner added.

The company sees good opportunities to grow both users and advertiser demand, he said, and it is developing a number of new ad products and enhancing current products.

Facebook "continues to be in an excellent market position," noted Andreas Scherer, managing partner at Salto Partners.

"The short-term blip in its share price is a sign that some investors would rather cash out than see how the company will conquer the challenges ahead," he told the E-Commerce Times.

Facebook "is by no means a fully mature company or stock," noted Barry Randall, chief investment officer at Crabtree Asset Management.

What Facebook gets right is that it recognizes its service doesn't meet everyone's needs, so it's been willing to pay for and develop other platforms, such as Messenger, WhatsApp and Instagram, he told the E-Commerce Times.

The company "has many avenues of growth available to it," Randall pointed out. With its large installed base, "any attempt to monetize a service or feature is instantly credible, if not immediately profitable."

Facebook is pushing hard in a number of hot growth areas, including virtual reality.

Facebook and Google together will rake in 71 percent of the $77 billion to be spent on mobile ads in the United States in 2020, according to Polar, although Google will be ahead.

The global ad market will grow by $73 billion, Zenith has predicted. Internet ad spending will attract nearly 39 percent of all global advertising by 2018.

Still, while Facebook isn't doing anything wrong compared to companies like Twitter, Yahoo or even Google, which seem to lurch from crisis to crisis, Randall noted, "any company that handles as much personal data as [it] does is always only a data breach away from a 10 percent stock drop and congressional hearings."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

Categories
Guide
0 Comment

Leave a Reply

Captcha image


RELATED BY

  • 5300c769af79e

    iPhone 6 Owners Sue Apple Over 'Touch Disease'

    According to a class-action suit, filed last week in California, the company concealed a material design defect that causes iPhone 6 and 6 Plus touch screens to become unresponsive.Citing iPhone repair pros, teardown experts iFixit last month reported a slew of problems caused by a strain on the handset's internal touch-screen chips.
  • 5300c769af79e

    DEAL: Save $5 on Chromecast and Chromecast Audio

    The dongles I’m talking about are the Chromecast and Chromecast Audio of course, two products from Google that turn TVs and speakers into Cast-ready devices for modern day stream-a-thons.With a $5 discount, you are looking at spending just $30 for each.
  • 5300c769af79e

    Google Lists More Places to Find Android TV, Changes for Android N

    Not only did Google explain where potential Android TV users could find the platform in new 2016 TV and set-top hardware from various companies, but also explained a few changes we will see once Android N hits the platform.If buying a new TV with Android TV baked in sounds like the best way to get your fix, Google states that new sets from Sony (2016 BRAVIA line) and RCA will have Android TV built in.
  • 5300c769af79e

    Is Your Partner Cheating? This Smart Mattress Will Alert You

    Whether it was Goldilocks, one of the three bears, or an illicit lover, the Durmet Smarttress will keep you updated.The Spanish-made smart mattress sends an alert to your phone whenever someone is using your bed "in a questionable way.