Friday 23 August 2019

Facebook shares hit all-time high as number of monthly users tops 1.5 billion

Facebook: File photo
Facebook: File photo

By Yasmeen Abutaleb and Lehar Maan

Facebook shares have hit an all-time high after the US tech giant reported record user numbers amid strong third quarter results.

The company has reported audience numbers that suggest it is poised to take on mainstream media as an advertising force, helping investors to overlook Facebook's huge spending on hiring and building data centers.

Facebook now has 8 billion video views per day from 500 million people, compared with 4 billion views in April.

And Facebook's website and Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than 1 in 5 minutes spent on mobile devices in the United States, Chief Operating Officer Sheryl Sandberg said.

"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.

Facebook had 1.55 billion monthly active users as of the end of September, up 14pc from a year earlier. Of these, 1.39 billion used the service on mobile devices.

"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Sandberg said in an interview. "We're also pretty focused on helping bring the next set of people who are not online, online."

Market research firm FactSet StreetAccount had predicted 1.53 billion monthly active users, with 1.36 billion on mobile.

Ad revenue grew 45.4pc to $4.30 billion, with 78pc of that coming from mobile versus 66pc in the year-ago quarter.

"Part of the upside came from Instagram. The Instagram monetization engine has been turned on really rapidly for the coming quarters and years," said Arvind Bhatia, an analyst with SterneAgee.

Facebook did not disclose Instagram's ad sales figures. But the app is expected to bring in $595 million in mobile ad revenues this year, research firm eMarketer said. Its ad revenue is projected to grow to $2.8 billion by 2017.

Facebook's huge $3.0 billion spending, up 68pc from the third quarter last year, did not seem to worry investors or analysts.

"I think the investors would like the company to continue to invest given that the opportunity is pretty large," said Shyam Patil of Susquehanna Financial Group.

The stock rose about 5pc to an all-time high of $109.34 in extended trading, before paring gains to about 4pc. It closed earlier at $103.94.

Total revenue jumped to $4.50 billion in the third quarter, from $3.20 billion a year earlier. Analysts had expected revenue of $4.37 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to stockholders rose to $891 million, or 31 cents per share, from $802 million, or 30 cents per share.

Excluding items, the Menlo Park, California-based company earned 57 cents per share, ahead of analysts' average estimate of 52 cents per share.

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