Facebook status update does little to spook markets as users grow

Facebook’s latest results have done little to intensify the volatility surrounding US tech stocks as user growth remained stable.

Its third quarter figures, which were being carefully watched for further evidence of a slowdown in performance, showed a rise in user growth, revenue and profits.

The company had previously warned of a slowdown for the rest of the year because of several pressures including the rising cost of user protection.

While it missed analysts’ estimates in terms of user growth between July and September, Facebook still achieved 2.27 billion monthly active users while daily active users rose to 1.49 billion from 1.47 billion in the previous three months.

Facebook CEO Mark Zuckerberg speaks during the F8 Facebook Developers conference on May 1, 2018 in San Jose, California. Facebook CEO Mark Zuckerberg deliverd the opening keynote to the FB Developer conference that runs through May 2.
Mark Zuckerberg says Facebook’s platforms, which include Instagram and WhatsApp, are continuing to grow

They represented annual rates of growth of 10% and 9% respectively, Facebook said.

Total revenue rose 33% to $13.73bn – on track with forecasts – though costs jumped to almost $8bn from $5bn in the same period last year when its honeymoon period was nearing its end.

2018 has proved the toughest for Facebook after years of stunning growth since its flotation in 2012.

It has had to grapple the fallout from the Cambridge Analytica scandal new data protections for users in Europe.

The company then admitted in late September – at the end of the third quarter – that 50 million accounts had been affected by a security breach.

Costs associated with the protection of users are expected, by analysts, to continue to grow substantially while there are also market rumours Facebook is looking to buy an established cyber security firm to deliver its security promises.

Shares in Facebook, down 20% in the year to date ahead of Tuesday trading, rose almost 3% in the regular trading session on Wall St just before the status update was revealed.

They were over 2% higher in after-hours trading as investors digested Facebook’s figures, which also showed 2.6 billion people now use Facebook, WhatsApp, Instagram, or Messenger.

It continued to give no individual performance figures for the wider “family”, as Facebook calls them.

preview image


Instagram founders quit company

Chief executive Mark Zuckerberg told shareholders: “Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day.

“We’re building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well.”

The share price recovery tracked a broader appetite for risk as US markets won back Monday’s losses after a volatile month that has hurt tech stocks more than most.

While the sector is seen as being in the firing line amid President Trump’s trade war with China, it has also been marked as over-valued.

Investors fear that the flood of cheap money that found its way in to the market from central bank post-crisis stimulus artificially inflated the market caps of tech giants, including Facebook, as institutional investors bought in to stunning user and revenue growth.

In addition to tougher scrutiny at home and abroad, big tech revenues are coming under tax pressure across Europe.

Facebook’s figures could be enough to spark a further fightback for FAANG (Facebook, Apple, Amazon, Netflix and Google) shares on Wednesday – Halloween.

Apple is the final tech major to report its progress in the current earnings season – on Thursday.

More follows…


Please enter your comment!
Please enter your name here