Facebook earnings beat despite backlash, shares surge

26 April, 2018, 12:43 | Author: Carmen Reese
  • Facebook shrugs off Cambridge Analytica scandal to post 1Q earnings beat

The company said that revenues rose to $11.9bn in the first three months of the year, compared to $8bn previously. It's also rolling out ad transparency tools giving users the ability to see who is running a political ad, who they're targeting, how much they're paying and what other messages they're sending out.

Changes to the Facebook news feed to prioritise posts from family and friends were also reflected in the quarter's data - though there was no specific update provided by the company regarding the time users spend on the site.

Facebook said the average number of daily active users over March had risen to to 1.45 billion, a 13% increase year-on-year.

"While privacy and security are very serious issues that Facebook is rightly focusing on, as long as the return-on-investment is there, advertisers won't stop investing in Facebook altogether", he said.

The company is proving that even with the Cambridge Analytica scandal and concerns over user privacy and the spread of fake news, businesses can't afford to pull dollars away from Facebook's 2.2 billion monthly active users.

Facebook stock gained more than 4% in after-hours trading after the earnings report was released, and was up 7% following its conference call.

Information of over 80 million Facebook users was allegedly harvested by CA, leading to a global backlash against the Silicon Valley-based company.

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In late March, Zuckerberg admitted his company had made mistakes in how it handled data belonging to its users and promised steps to restrict developers' access to such information.

Net income rose 63% to almost $US5 billion against the year-ago quarter on revenue that was up 50% to $US11.97b. "To each query, the company that faces probes in different parts of the world for illegal data mining, has provided one line answers which don't explain anything or provide any assurances".

In another sign public anger directed at Silicon Valley hasn't hurt business, Twitter and Alphabet, Google's parent company, also reported strong financial results this week.

Facebook chief financial officer David Wehner said use of the social network might ebb slightly in Europe due to GDPR, but executives were confident its ad business was on firm footing since the rules affect its competitors as well.

Facebook data breach has snowballed into a major controversy in India with main political parties BJP and Congress accusing each other of engaging services of Cambridge Analytica to influence elections in the country.

Tighter regulation could make Facebook's ads less lucrative by reducing the kinds of data it can use to personalize and target ads to users, although Facebook's size means it could also be well positioned to cope with regulations.

The troubles for social media giant Facebook and its tainted British vendor Cambridge Analytica are far from over in India. The question for analysts will be whether the declines are truly Facebook's own design or a reflection of user preference. Zuckerberg spent two days on Capitol Hill earlier this month getting grilled by lawmakers about Facebook's responsibility.

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