Facebook earnings: Mixed results, but shares rise

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Updated Oct 30, 2018 4:57 PM EDT

After alerting investors to increasing costs and slowing growth, Facebook reported profit that cleared expectations and added additional users despite a difficult year for the social-media giant.

Revenue rose 33 percent to $13.73 billion in the third quarter, the company reported, beneath estimates of $13.78 billion. Monthly active users totaled 2.27 billion in the quarter, below an estimate of 2.29 billion and up from 2.23 billion in the previous three months.

But the social network giant also reported quarterly net income of $5.14 billion, or $1.76 per share, which surpassed Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for earnings of $1.46 per share.

The earnings come as the company navigates a harsh year in which it has had to fend off threats of regulation and deal with a massive privacy breach and public discontent over its ability to curb misinformation before another U.S. election. 

“Facebook was a market darling, but some now see it as the embodiment of evil. Facebook has had more than its share of mishaps over the past year, with data scandals and accusations of bias, but this too shall pass,” Clement Thibault, a senior analyst at Investing.com, emailed.

Shares fell 5 percent immediately upon the earnings release in after-hours trading but then rebounded and were last up around 1.3 percent.

Ahead of its earnings release, Facebook shares ended 3 percent higher in Tuesday’s regular-hours trading, closing at $146.22. They’ve declined 35 percent since hitting a record high on July 25 amid worries the social network’s usage has flat-lined. 

After an unpleasant earnings surprise three months ago, investors on Tuesday were largely looking for the company to avoid a repeat of its second-quarter revenue miss and warning of slower growth and increased spending.

“Facebook is still a company with revenue growth, zero debt and multiple products ingrained in people’s daily lives. The rumors of its death are, without question, premature,” added Thibault. “Over a cycle, stocks naturally go in and out of favor with investors.” 

Includes reporting from The Associated Press

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