Facebook profit rises to $7.3b but shares sink

San Francisco: Facebook on Wednesday reported quarterly earnings and user growth stronger than most forecasts, but shares took a hit in after-market trades.

The leading online social network said net income rose seven per cent from a year ago to $7.3 billion (Dh26.8 billion), while revenue increased 25 per cent to $21 billion in the final three months of last year.

The number of people using Facebook monthly climbed eight per cent to 2.5 billion; for all its apps including Instagram, Messenger and WhatsApp, the figure was 2.89 billion.

Shares, however, quickly dropped more than six per cent for reasons not immediately clear.

“We had a good quarter and a strong end to the year as our community and business continue to grow,” said Facebook chief executive Mark Zuckerberg.

Investors may be concerned by continuing increases in the amount of money Facebook spends as it pours resources into protecting privacy and preventing the platform from being used as a platform for hate, abuse, and disinformation.

Costs in the recently ended fourth quarter rose 34 per cent to $12.2 billion, and it ended the year with its ranks of employees up 26 per cent to nearly 45,000.

The results, while ahead of most analyst forecasts, “may disappoint some investors accustomed to bigger outperformance,” said Baird analyst Colin Sebastian.

Delivering gains

Facebook still delivered gains in advertising, which represents the vast majority of its revenues, up 25 per cent at $20.7 billion in the quarter, and grew its user base.

“Despite all of the concerns that have been swirling around the company in the past two years, it beat expectations on revenue, and it demonstrated continued growth in its user base,” said eMarketer principal analyst Debra Aho Williamson.

“This is a company that has shown that it can withstand ongoing criticism of its practices and yet still pull out gains in both revenue and users.”

The market tracking firm expects Facebook’s momentum to continue, with advertisers increasing spending at the social network and its Instagram service.

Facebook has faced a barrage of criticism recently for the misuse of users’ data to influence elections amid increasing calls for the California-based internet titan to be regulated.

Facebook this week began rolling out a new tool allowing users of the social network to view and delete data it collects from third parties.

The feature is part of an effort by Facebook to shore up its image in the wake of a series of privacy scandals, including the hijacking of personal data on millions of users by a British consultancy developing voter profiles for Donald Trump’s 2016 campaign.

Separately, Facebook said its “supreme court,” designed to be the final word in content removal disputes, should be in operation in a few months, as it named a British human rights activist to a key post.