Facebook reports fourth-quarter profit and user growth despite challenges
Facebook had a strong fourth quarter as it made more money on advertising and added more users despite challenges around regulation, privacy and efforts to fight election interference.
Profit and revenue both handily surpassed Wall Street’s expectations.
Facebook said that about 2.89 billion people use at least one of its services – Facebook, WhatsApp, Instagram or Messenger – each month. About 2.26 billion people use at least one every day.
The Menlo Park, California, company said its main service had 2.5 billion monthly users at the end of the year, up 8% from a year earlier.
“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,” said eMarketer analyst Debra Aho Williamson.
Facebook is under growing regulatory scrutiny around the world. In the US, it faces several government investigations for alleged anti-competitive behaviour. Last August, it was fined 5 billion US dollars (£3.84 billion) by the Federal Trade Commission for privacy violations, the largest FTC fine ever for a tech company.
Amid ongoing criticism about how Facebook handles the private data of its users, CEO Mark Zuckerberg has announced that the company was shifting course for a more “privacy-focused” future. This includes emphasising small-group and private communication, though details are still scant.
It is not clear if this privacy focus will mean anything for how ads on Facebook are targeted, which has always been among the chief concerns for privacy advocates.
And Facebook continues to face challenges over election interference. After Russian actors used social media platforms like Facebook to interfere in the 2016 US elections, the companies have tried to clamp down on fake accounts, misinformation and other forms of misuse. This forthcoming US election will be a test of whether they have done enough.
In reporting fourth-quarter results, Facebook said it earned 7.35 billion dollars (£5.65 billion), or 2.56 dollars (£1.97) per share, up 7% from 6.88 billion dollars (£5.29 billion), or 2.38 dollars (£1.83) per share, a year earlier.
Revenue rose 25% to 21.1 billion dollars (£16.22 billion) from 16.9 billion dollars (£12.99 billion), the bulk of that from ads. Analysts were expecting earnings of 2.52 dollars (£1.94) per share and revenue of 20.9 billion dollars (£16.06 billion), according to FactSet.
Facebook’s stock dropped more than 6% in after-hours trading after the results came out. Some investors may be concerned about the company’s growing expenses, while others could simply be cashing out following a record high for the stock earlier in the day.
