Facebook Shares Surge In Face Of Data Scandal
In its first-quarter earnings report, Facebook said its revenue jumped 49 percent, Bloomberg reported today. Facebook might be spending money to fix issues that have stained the company’s image, like privacy breaches and election manipulation, but its message for investors is clear: business is booming.
“We’re going to invest even more in building the experiences that bring people together on Facebook in the first place,” Facebook CEO Mark Zuckeberg said on a conference call yesterday. According to the same outlet, Facebook shares were up 6.3 percent today. This clearly signals that the stock is recovering; It dropped 14 percent following the Cambridge Analytica scandal.
Chief Operating Officer Sheryl Sandberg said the following.
“By tracking user activity, the company’s marketing business can serve up relevant promotions and make sure Facebook remains free for its users. And there are plenty more ways for Facebook’s advertising business to expand further, such as through the photo-sharing app Instagram.”
Quarterly sales rose to almost $12 billion and Facebook now has 1.45 billion daily users.
According to CNBC, 87 million Facebook users were impacted by the Cambridge Analytica data leak. Following the scandal, #DeleteFacebook was trending on Twitter for days. As Time noted, apart from Mozilla, Playboy, and SpaceX, even celebrities like Jim Carrey, Will Ferrell, Elon Musk, and Cher took part in the campaign. This push appears to have had little to no impact on shares.
In a note to investors, Mark Mahaney, an analyst at RBC Capital Markets, wrote the following.
“Marketers continued to spend on the platform at record highs. And we believe actions that lead to revenues speak louder than words.”
Some may have left Facebook for good, but Facebook actually added users in North America, reversing the decline. Monthly active users in the U.S. and Canada rose to 241 million. Facebook’s net income in the first quarter climbed 63 percent. According to Bloomberg, analysts predicted that Facebook’s net income would climb $1.35 a share, but they were wrong – it climbed to $1.69 per share, or $4.99 billion total. Apart from that, Facebook boosted its stock-buyback program by $9 billion.
Facebook shares continue to rally after upbeat earnings https://t.co/9bxJO8OhNL pic.twitter.com/U25cQgYsNR
— Bloomberg (@business) April 26, 2018
Along with Google, Facebook holds a dominant position in mobile advertising. Last year, mobile made up 85 percent of Facebook’s ad revenue. In the recent period, that jumped to 91 percent. Facebook Inc. has plenty of online real estate, so it can make money beyond its main platform. Instagram, which is expected to reach a billion users by the end of 2018, and chat apps like WhatsApp and Messenger, will additionally boost Facebook Inc.’s revenue.
At the moment, the social network is concerned with the European Union’s General Data Protection Regulation (GDPR), which Facebook has said could reduce the amount of active users. The GDPR is, as the Inquisitr noted, the biggest overhaul of personal data privacy rules since the birth of the internet.
