Facebook Shares Drop, But Sees A Rise In Mobile Advertising Revenue
On Wednesday, Facebook shares plummeted in after-hours trading, falling slightly shorter than Wall Street’s forecasts.
In the first three months of the year, the social media giant said it had roped in $3.54 billion in contrast to $3.56 billion predicted by analysts, according to The Guardian.
The company’s expenses rose considerably, reporting $2.51 billion in the first quarter of 2015, an 83% increase from the first quarter of last year. There were more expenses in research and development as well, going from $455 million in 2014 to $1.06 billion this year. Ambitious expansion plans and the cost of integrating acquisitions have been attributed to the escalation in expenses.
For the first time since CEO and founder Mark Zuckerberg made the company public in 2012, Facebook’s share price, which went down by more than 2%, fell short of predictions by analysts.
Scott Kessler, S&P Capital IQ analyst, said, “We are seeing revenue growth decelerate and expenses increasing as a percentage of revenue, so people understandably want a better sense when the investments being made are going to contribute notably to revenue growth.”
Zuckerberg said, “This was a strong start to the year.
“We continue to focus on serving our community and connecting the world.”
However, this year wasn’t entirely unfavorable for Facebook. Its mobile advertising revenue saw an escalation, making up 73% of the entire social media mobile advertising revenue, a jump from 69% recorded last year, according to CNN.
Over 4 billion videos are watched on its service everyday by people all over the world. A host of popular applications developed and/or owned by Facebook, like Messenger, Instagram and Whatsapp, are also being used widely.
Facebook has been able to increase its user retention since last year. It now has 936 million daily active users, which constitute 65% of its total monthly active user base. Last year, the same stood at 63%.
Facebook surpassed Wall Street’s expectations in terms of earnings. The social media company earned 42 cents a share as opposed to 41 cents a share anticipated by analysts.
According to USA Today, much of Facebook’s fall during the first quarter could be attributed to foreign exchange rates. For a company with more than 50 percent revenue coming from overseas, revenue would have upped by 49% if it were not for currency exchange rates.
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