Thursday, March 28, 2024 | Ramadan 17, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Facebook keeps attracting digital ads, shares jump after hours

1120607
1120607
minus
plus


CALIFORNIA: Facebook Inc reported better-than-expected profit, showing that digital advertisers were still flocking to spend money on the service in order to reach customers even after a series of high profile embarrassments for the world’s largest online social media network.


Investors have worried that Facebook’s pledge to invest heavily to improve its privacy and security standards would blunt the company’s growth, but its fourth-quarter results appeared to soothe those concerns, sending its stock price up more than 11 per cent after hours.


“The worst is over for this social media giant,” said Haris Anwar, an analyst at Investing.com: “Its ad business and user engagement haven’t been affected despite all the negative blows of the past year.” The company has struggled with scandals over improperly shared customer data and propaganda on its service that tarnished its image and made it the target of political scrutiny across the globe last year.


That has not significantly harmed advertising, where Facebook makes the vast majority of its revenue. Although ad prices have fallen, Facebook has been showing more ads, particularly on its Instagram app, as it finds users crave daily visual updates from friends, family and celebrities enough to sift past commercials and photo ads every few seconds.


The number of ad impressions across Facebook’s system accelerated each quarter last year compared to the prior year’s quarters, as Facebook moved more aggressively in generating revenue from Instagram after its initial caution on using that strategy, for fear of turning off users.


Total fourth-quarter revenue rose 30 per cent to $16.9 billion from $12.97 billion, its slowest quarterly revenue growth in more than six years as a public company. It was, however, above analysts’ average estimate of $16.4 billion.


Net income rose to $6.88 billion, or $2.38 per share, up from $4.27 billion, or $1.44 per share, a year earlier. Analysts on average had expected earnings of $2.19 per share, according to IBES data from Refinitiv.


“These numbers are actually some of the most reassuring in its short history,” said George Salmon, an analyst at Hargreaves Lansdown.


“Not only are login trends in Europe improving after a stagnant couple of quarters, the group has beaten expectations on revenue and profit. These results will go a long way towards regaining the trust of Wall Street.” Facebook shares rose more than 11 per cent to $168.20 after the bell. They closed up 4.3 per cent in regular trading.


Facebook managed to increase sales despite a 2 per cent drop in the average price per ad in the fourth quarter compared to a year ago, as its ad views came from less lucrative areas such as Instagram’s Stories feature and developing markets.


It was the first price decline since the final quarter of 2012, when Facebook lowered prices to stoke demand in emerging markets, but the company appeared to make up for the drop in overall sales volume.


Executives said on a conference call after reporting earnings that they would focus this year on finding new ways to push ads. — Reuters



SHARE ARTICLE
arrow up
home icon