Despite being a target for investigations, regulatory pressures, and all the criticism, Facebook Inc (FB) easily managed to beat estimates for its third quarter, causing its stock to surge 5% in after-hours trading on Wednesday and 3.9% in premarket trade on Thursday. The Silicon Valley social media network’s strong results show that the company is persevering despite regulatory and competitive pressures.
Facebook Q3 earnings
Third-quarter net income came to $6.09 billion, compared to $5.14 billion in the same quarter a year ago. Revenue literally jumped from $13.73 billion to $17.65 billion, an overall 29% increase. Revenue is mostly made of advertising sales, which made 98% of this extraordinary result.
About 2.8 billion people use Facebook and its properties each month, namely Instagram, WhatsApp, and Messenger. For now, the company’s earnings have overpowered the critics surrounding the social media pioneer with its CEO using every possible venue to defend his company over the past few months.
Settlement to pay fine over Cambridge Analytica
On Wednesday, the company agreed to pay a $645,000 penalty imposed by the UK Information Commissioner’s Office, which found that the company failed to safeguard user data that was gathered by Cambridge Analytica, a political data firm. But it’s important to note that Facebook will not admit any liability under the settlement that involves data of as many as 87 million Facebook users. Overall, it’s clear that the company has managed to shrug off scandals and pursue its growth path forward.
The social media landscape is shaped by intense efforts of industry peers to gain market share. And even Snap Inc’s (SNAP) Snapchat seems to be making a comeback after Facebook started “borrowing” ideas from the platform, as their third quarter of the fiscal year also exceeded profit and growth expectations. With $446 million revenue and 210 million daily active users, no wonder its shares went up more than 150% from last year. Moreover, it is a very appealing platform for targeting younger demographics.
The company has a long way to go before reaching profitability, but it’s doing a good job at cutting loses, along with adding 7 million daily active users during the last quarter and boosting revenue 50% on a year-to-year basis.
But the truth of the matter is that it is quite challenging to consistently grow, especially with constant newcomers fighting to grab attention from users. One such example is Tik Tok, not only one of the most popular social media apps in 2019 but more importantly, one of the fastest-growing. It is also one of the most confusing for some as it combines the power of artificial intelligence to “revolutionize the way people consume and receive information.” And with more than half a billion monthly users worldwide and nearly 80 million downloads in the U.S. alone, it is more than a worthy competitor.
So, despite being a social media pioneer, Facebook has its hands full to keep its engagement rates and enhance the privacy of its members. And Twitter’s (TWTR) recent decision to halt political ads due to the company’s view that political reach should be “earned, not bought” only put more pressure on the Silicon Valley networking giant that is, for now, sticking to its “democratic” opinion.
The business and the community are clearly continuing to grow despite the backlash as Facebook’s stock is up 44% this year. And the company is a target in so many areas, with FTC investigation in the company’s practices, a record $5 billion fine for privacy violations and quite a few politicians calling for the company’s dissolution.
But it seems that all this scrutiny is not doing that much harm to any of the corporate giants, namely Amazon.com Inc (AMZN), Google (GOOGL) and Apple Inc (AAPL), which also just exceeded estimates with its highest Q4 revenue ever due to strong growth in wearables and despite dropping iPhone sales. These companies redefined our everyday lives and they shape the world we see and know today. And by the looks of it, they are here to stay.
This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.
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