Facebook shares stung by slow users, revenue growth

(Reuters) – Facebook Inc (FB.O) outperformed analysts' earnings estimates on Tuesday but failed to meet targets for growing monthly users and reported the slowest sales growth in about six years.

A woman looks at the Facebook logo on an iPad in this photo illustration taken on June 3, 2018. REUTERS / Regis Duvignau / Illustration / File photo

The social network is more in control of costs than expected by some investors, but faces increasing numbers of users, causing stocks to fluctuate in both directions after the third quarter results.

Facebook's shares rose about 3 percent to $ 146.22, having dropped 5 percent after the bell, closing at 2.9 percent at $ 146.22.

Big winners on Wall Street in recent years, Internet giants like Facebook, Amazon.com Inc (AMZN.O) and Google Parent Alphabet Inc (GOOGL.O) suffered a stroke in the last month.

The slowdown in growth after years of strong performance was a major concern, and Facebook's weak results underlined some of these fears.

Still, the company had warned that its revenue and revenue growth might be the slowest in years. Facebook spending is bloated to protect against cheaters and hackers, and invests in more engaging content such as videos.

The emerging companies Instagram and WhatsApp also need to catch the slack by flattening the use of Facebook.

Total revenue for the third quarter was $ 13.73 billion, up 33 percent over the same period last year, and less than $ 13.78 billion on average for Refinitiv analysts.

Facebook said ad sales were affected by unfavorable exchange rates.

Quarterly earnings of $ 5.14 billion, or $ 1.76 per share, were 9 percent up on the same period last year and above the $ 1.48 average diluted value.

As user growth on Facebook declined, ad sales continued to grow as there were ways to better target ads to clicks and views.

With the weakening of the trend and the fact that the company both optimizes its services and spends more on its image among consumers, the company warned in July that sales and operating margins would grow more slowly than in previous years.

Total costs increased 53 percent year over year to $ 7.95 billion in the third quarter.

His reputation was hampered by a data breach in September affecting 29 million users and a privacy scandal involving a UK political consultancy in March.

It has also been shaken by national and international information warfare at its service, including WhatsApp and Instagram, and a wave of executive departures.

Nevertheless, the company has gained some users. The company said that 2.6 billion users interact with at least one of their apps each month, compared to 2.5 billion when it was first released in the last quarter to emphasize its potential audience for advertisers in the size is unsurpassed.

The monthly and daily users of the Facebook app compared to the last quarter increased by 10 percent to 2.27 billion or 9 percent to 1.49 billion. According to estimates, the average refinancing values ​​were 2.292 billion and 1.508 billion.

Some financial analysts are concerned that the company's operational problems are so great that costs continue to be out of line with revenues.

The company's weakest quarterly growth as a listed company in 2012 was 32.2 percent in each of the first two quarters of the report.

"The recurrence of issues encourages us to stop controlling the business as it needs to," said Pivotal Senior Research Analyst Brian Wieser in an email this month.

Facebook suffered the biggest one-day wipeout in the history of the US stock market after posting its poor forecast in July. Shares fell nearly 19 percent.

It continues to trade at a discount to colleagues. The shares of online seller Alphabet Inc, for example # 1, are expected to be 22.4 times higher in the next 12 months compared to 17.6 for Facebook.

Reporting by Munsif Vengattil in Bengaluru and Paresh Dave in San Francisco; Processing by Anil D & # 39; Silva

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