San Francisco: Facebook Inc shares rose on Wednesday after the social network reported revenue that beat Wall Street estimates, showing no initial impact on its lucrative ad business from a scandal over the handling of personal data.
Shares traded up 4.6 per cent at $167, paring a month-long decline that began with Facebook’s disclosure in March that consultancy Cambridge Analytica had harvested data belonging to millions of users. The Cambridge Analytica scandal, affecting up to 87 million users, generated calls for regulation and for users to leave the social network, but there was no sign that advertisers cared.
“Everybody keeps talking about how bad things are for Facebook, but this earnings report to me is very positive, and reiterates that Facebook is fine, and they’ll get through this,” said Daniel Morgan, senior portfolio manager at Synovus Trust Company. His firm holds about 73,000 shares in Facebook.
Facebook’s quarterly profit beat analysts’ estimates, as a 49 per cent jump in quarterly revenue slightly outpaced a 39 per cent rise in expenses from a year earlier. The mobile ad business grew on a major push to add more video content.
Facebook said monthly active users in the first quarter rose to 2.2 billion, up 13 per cent from a year earlier and matching expectations, according to Thomson Reuters.
The company reversed last quarter’s decline in the number of daily active users in the United States and Canada, saying it had 185 million users there, up from 184 million in the fourth quarter.
The results are a bright spot for the world’s largest social network amid months of negative headlines about the company’s handling of personal information, its role in elections and its fueling of violence in developing countries.
Facebook, which generates revenue primarily by selling advertising personalized to its users, has demonstrated for several quarters how resilient its business model can be as long as users keep coming back to scroll through its News Feed and watch its videos. — Reuters
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