Facebook Stock Is Soaring on Hopes That Stories Will Grow

Facebook Stock Is Soaring on Hopes That Stories Will Grow

It missed on revenue, reporting $13.73 billion while analysts were expecting $13.80 billion.

On Tuesday, Facebook posted third-quarter earnings per share of $1.76 on revenue of $13.73 billion, versus consensus estimates for EPS of $1.46 on revenue of $13.765 billion, according to FactSet.

Emerging businesses Instagram and WhatsApp also have yet to pick up the slack from flattening usage of Facebook.

About 2.6 billion users interact with at least one of Facebook's services each month, up from 2.5 billion when it released the figure for the first time last quarter to emphasise that its potential audience for advertisers is unrivalled in size. The average revenue per user was right on target, however, at $6.09. But new problems keep cropping up nearly every week; last week, for example, the company said it had identified and removed a new influence network that had originated in Iran.

Facebook said ad sales were affected by unfavorable foreign exchange rates. Advertising is up 33-percent year-over-year. A year ago, Facebook's revenue grew by 47%.

After a year of seemingly never-ending privacy debacles and scrutiny over Russian meddling in elections and "fake news", the big blue juggernaut that is Facebook appears to be slipping gears. Net income (profit) of $5.1bn, however, was well above estimates. Capital expenditures were $3.34 billion, and cash and cash equivalents were $41.21 billion at the end of the third quarter.

Still, some analysts think Facebook's business can continue to thrive.

"Young users are deleting the app and all users are taking breaks from Facebook", said Natasha Lamb, managing partner at Arjuna Capital. And despite scandals around fake news and election interference, it added more users, too.

Facebook disclosed its vision for the future along with its quarterly financial results, which showed slowing growth in revenue and in the numbers of new users. And that was after it surged big time in the month leading up to its results.

The following day the stock plunged 19 percent. The stock's all-time high is around $210. Is Facebook killing us?

"Facebook's growth is rooted in a history of disrupting its own model with innovations like News Feed and the transition from desktop to mobile".

Facebook reported DAU growth in its least profitable markets - those outside the USA and Canada and Europe.

Instagram has also remained a bright spot for Facebook.

More broadly, the social network's reputation has suffered from a data breach affecting 29 million users in September and a privacy scandal involving a British political consulting firm in March. "It's going to take time".

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"Facebook was a market darling, but some now see it as the embodiment of evil". That is on top of the almost three-percent that it grew during trading hours today alone.

Still, he said, Facebook stories "will be in a better position soon".

"This is a journey that's going to take years, not quarters", Wehner said in the call with investors.

It's been a wild year for Facebook, not just for investors, but even Facebook users. Critics panned the idea, saying the company wouldn't be able to convince users to put a Facebook-made camera in their homes.