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."