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Facebook shares roller coaster as it rides change
SAN FRANCISCO, Oct 31, 2018 (BSS/AFP) – Facebook announced plans Tuesday to
adapt to users sharing more privately as the leading social network pours
money into an ongoing battle with “bad actors” out to misuse its service.
Silicon Valley-based Facebook reported that its quarterly profit climbed in
the recently ended quarter, but the social network — mired in a spate of
controversies — gained fewer users than analysts had expected.
Profit beat Wall Street expectations by jumping nine percent to $5.14
billion on revenue that leaped 33 percent to $13.7 billion in the quarter
that ended September 30.
Facebook shares went for a rollercoaster ride in after-market trades as
executives revealed quarterly earnings figures along with challenges and
opportunities seen in shifting trends in user behavior.
Shares jumped, dove and then rose anew before staying on higher ground, up
3.1 percent to $150.80, on the Nasdaq early in the evening in New York.
“Right now, the market is really nervous and it doesn’t take much to move
the stock,” said analyst Rob Enderle of Enderle Group.
“As long as they are meeting or exceeding on the bottom line (profit) they
will be fine.”
The number of people who used Facebook monthly rose 10 percent to 2.27
billion, but analysts had expected that figure to be slightly higher.
Facebook has been trying to fend off concerns about how well it protects
user data and defends against use of the site to spread misinformation aimed
at swaying elections.
Controversies that have battered Facebook since the 2016 presidential
election in the US have raised questions over whether co-founder Mark
Zuckerberg should keep his post as chief executive.
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“Our community and business continue to grow quickly, and now more than two
billion people use at least one of our services every day,” Zuckerberg said
in an earnings call, including WhatsApp, Instagram and Messenger in the
count.
“We’re building the best services for private messaging and stories, and
there are huge opportunities ahead in video and commerce as well.”
Facebook users are shifting fast to sharing more privately with messages or
a “Stories” feature for creating short photo or video collections, instead of
posting in their main feeds, according to Zuckerberg.
While Facebook has made an art of monetizing ads in newsfeeds, it has yet
to optimize making money from messages and stories.
“This is one of those situations where the community growth we are seeing
is outpacing the progress we made on developing ads in that space,”
Zuckerberg said of Stories.
“I think we will get there in time, and the opportunity will be bigger, but
I can’t tell you what that time frame will look like.”
Facebook is also seeing a rapid rise in viewing videos, which also generate
less ad money per minute than newsfeeds.
– Big spender –
Zuckerberg said he expected 2019 to be “another year of significant
investment” for Facebook, and executives projected revenue growth would slow.
Facebook finished the quarter with 33,606 employees in a 45 increase
percent over the number of workers it had the same time last year.
Just weeks ago, Facebook activated a “war room” as a nerve center to halt
misinformation and manipulation of the social network by foreign actors
trying to influence elections.
The war room at the company’s Silicon Valley headquarters is part of
stepped up security that will include doubling the security team to 20,000
employees.
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“The upcoming election will be a real test of the protections we put in
place,” Zuckerberg said on an earnings call.
“We will see all the good and bad humanity can do.”
Last week, Facebook said it had taken down accounts linked to an Iranian
effort to influence US and British politics with messages about charged
topics such as immigration and race relations.
The social network identified 82 pages, groups and accounts that originated
in Iran and violated policy on coordinated “inauthentic” behavior, according
to cybersecurity policy head Nathaniel Gleicher.
Gleicher said there was overlap with accounts taken down earlier this year
and linked to Iran state media, but the identity of the culprits had yet to
be determined.
Spending on security and election-related defenses were part of the reason
overall costs and expenses reported in the quarter rose 53 percent to $7.95
billion from $5.2 billion a year earlier.
Zuckerberg said Facebook is up against sophisticated adversaries who
continue to evolve.
“These aren’t problems you fix, they are problems you manage,” Zuckerberg
said of the challenge.
“There is no silver bullet.”
In what could wind up costing Facebook more money, British finance minister
Philip Hammond said he planned to introduce a digital services tax aimed at
tech giants from 2020, responding to public outrage over low tax payments by
US tech giants.
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