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Facebook shares roller coaster as it rides change

Facebook shares roller coaster as it rides change

The Facebook logo is shown at Facebook headquarters in Palo Alto, California. (REUTERS/Robert Galbraith/File Photo)

SAN FRANCISCO: Facebook on Tuesday (Oct 30) said it is striving to adapt to users sharing more privately at the leading social network as it continues to pour money into an ongoing battle with "bad actors" out to misuse its service.

Silicon Valley-based Facebook reported that its quarterly profit climbed in the recently ended quarter, but the world's leading social network - mired in a spate of controversies - gained fewer users than analysts had expected.

Profit jumped nine per cent to US$5.14 billion on revenue that leaped 33 per cent to US$13.7 billion in the quarter that ended Sep 30.

Facebook shares went for a rollercoaster ride in after-market trades as executives revealed quarterly earnings figures along with challenges and opportunities seen in shifting trends in user behaviour.

Shares jumped, dove and then rose anew before staying on higher ground, up 3.2 per cent to US$150.90, on the Nasdaq early in the evening in New York.

The number of people who used Facebook monthly rose 10 per cent to 2.27 billion, but analysts had expected that figure to be slightly higher.

Facebook announced the results as it strives to fend off concerns about how well it protects the data of users and defends against use of the site to spread misinformation aimed at swaying elections.

Controversies that have battered Facebook since the 2016 presidential election in the US have raised questions over whether co-founder Mark Zuckerberg should keep his post as chief executive.

"Our community and business continue to grow quickly, and now more than two billion people use at least one of our services every day," Zuckerberg said in an earnings call, including WhatsApp, Instagram and Messenger in the count.

"We're building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well."

Facebook users are shifting fast to sharing more privately with messages or a "Stories" feature for creating short photo or video collections, instead of posting in their main feeds at the social network, according to Zuckerberg.

While Facebook has made an art of monetizing ads in news feeds, it has yet to optimize making money from messages and stories.

"This is one of those situations where the comunity growth we are seeing is outpacing the progress we made on developing ads in that space," Zuckerberg said of Stories.

"I think we will get there in time, and the opportunity will be bigger, but I can't tell you what that time frame will look like."

Facebook is also seeing a rapid rise in viewing videos, which also generate less ad money per minute than news feeds.


Zuckerberg said he expected 2019 to be "another year of significant investment" for Facebook, and executives projected revenue growth would slow.

Facebook finished the quarter with 33,606 employees in a 45 per cent increase over the number of workers it had the same time last year.

Just weeks ago, Facebook activated a "war room" as a nerve centre to halt misinformation and manipulation of the largest social network by foreign actors trying to influence elections in the United States and elsewhere.

The war room at the company's Menlo Park headquarters in California is part of stepped up security that will include doubling the security team to 20,000 employees.

"The upcoming election will be a real test o the protections we put in place," Zuckerberg said on an earnings call. "We will see all the good and bad humanity can do."

Last week, Facebook said it had taken down accounts linked to an Iranian effort to influence US and British politics with messages about charged topics such as immigration and race relations.

The social network identified 82 pages, groups and accounts that originated in Iran and violated policy on coordinated "inauthentic" behavior, Facebook head of cybersecurity policy Nathaniel Gleicher said.

Gleicher said there was overlap with accounts taken down earlier this year and linked to Iran state media, but the identity of the culprits had yet to be determined.

Spending on security and election-related defenses were part of the reason overall costs and expenses reported in the quarter rose 53 per cent to US$7.95 billion from US$5.2 billion a year earlier.

Zuckerberg said Facebook is up against sophisticated adversaries who continue to evolve.

"These aren't problems you fix, they are problems you manage," Zuckerberg said of the challenge. "There is no silver bullet."

In what could wind up costing Facebook more money, British finance minister Philip Hammond said he planned to introduce a digital services tax aimed at tech giants from 2020, responding to public outrage over low tax payments by US tech giants.

READ: Britain to introduce new tax for tech giants from 2020

Source: AFP/de


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