Why Facebook Shares Fell after 4Q17 Results



Shares fell more than 4% in extended trading

Facebook (FB) reported its 4Q17 results on January 31, 2018, after regular trading on the stock in the United States (SPY) ended. The stock fell more than 4% in extended trading after the results were announced. It rebounded soon after.

So why did investors send Facebook shares down and then change their minds and send them back up? The sequence of events and management’s comments on the day Facebook reported its results could have contributed to the short-lived, up-and-down movement of the stock.

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Are people spending less time on Facebook?

Facebook first reported its earnings and revenue, which was brief. Then it commented that the time spent on Facebook had fallen about 50 million hours per day.

The comment caused jitters among investors, with some wondering whether competitors such as Twitter (TWTR), Snap (SNAP), and Alphabet’s (GOOGL) Google had started backing Facebook into a corner.

Facebook says it’s not about time spent

Shortly after, Facebook had a meeting with analysts in which it cleared the air about less time spent on its platform.

Facebook’s chief executive officer Mark Zuckerberg wrote, “So I want to be clear: the most important driver of our business has never been time spent by itself. It’s the quality of the conversations and connections.”

Facebook’s chief financial officer David Wehner also eased the tension with optimistic comments about the company’s long-term performance.


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