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Facebook investors skittish as user growth continues to slow

AAP  |  31 Oct 2018Text size  Decrease  Increase  |  
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Facebook is still adding users every quarter, just not in the US or Europe, the social networking giant has revealed as part of its Q3 earnings results.

It said on Tuesday that the number of daily active users has been flat in the US for all of 2018, while it continues to lose users in Europe.

Investors briefly sent Facebook's stock down 3 per cent in after-hours trading following the release of these results. However, the company's share price quickly recovered on news of better-than expected earnings.

Facebook generated some $US13.73 billion in revenue during the third quarter, compared to $US10.33 billion during the same quarter a year ago.

Net income for the quarter came in at $US5.14 billion, compared to $US4.71 billion in Q3 of 2017. Diluted earnings per share came in at $US1.76, compared to $US1.59 the year before. Analysts had expected earnings of $US1.46 per share on revenue of $US13.77 billion.

The social network saw some 2.27 billion monthly active users in September of 2018, compared to 2.07 billion a year ago. Daily active users averaged 1.49 billion in September, up 9 per cent over last year's results.

However, US and Canada daily averages have been flat at 185 million since Q1 of 2018, and daily active users in Europe declined to 278 million, down from 279 million in Q2 and 282 million in Q1.

Facebook CEO Mark Zuckerberg seemingly tried to shift the conversation to some of the social network platform's other services, in a quote supplied with the earnings release:

"Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day," he was quoted saying.

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

That kind of positive outlook may have helped to calm investors' nerves, and prevent a sell-off panic like the one that followed Facebook's Q2 results.

Following its quarterly report in July investors sent Facebook's stock off a cliff after the company posted a miss on revenue and user growth.

Investors were particularly scared by Facebook's forecasts, with executives telling Wall Street that Facebook's operating margin would sink from the mid-forties to the mid-30 per cent range.

In Q3, Facebook's operating margin was 42 per cent, 2 per cent lower than a year before.

 

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