Facebook Stock Rockets Higher as Earnings Shatter Estimates

Mark Zuckerberg recently revealed Facebook's 10-year plan to connect the entire world and bring it online
Provided by Belfast Telegraph

Tech giant Facebook crushed analyst estimates when it reported first-quarter results on Wednesday.

The company reported adjusted first quarter earnings of 77 cents per share on revenue of about $5.38 billion. Analysts had expected Facebook (FB) to report earnings of about 62 cents per share on $5.26 billion in revenue, according to a consensus estimate from Thomson Reuters.

In fact, Facebook’s earnings per share figure was 10 percent better than the highest estimate of 41 Wall Street analysts.

Facebook also said it was proposing the creation of new class C shares. If the proposal is approved, shareholders would get two C shares for each class A or class B share they own. This would potentially allow Facebook CEO Mark Zuckerberg to sell some of his shares while still maintaining control of the company.

“This proposal is designed to create a capital structure that will, among other things, allow us to remain focused on Mr. Zuckerberg’s long-term vision for our company and encourage Mr. Zuckerberg to remain in an active leadership role at Facebook,” the company said in its earnings release.

The adoption of the proposal is subject to the approval of Facebook shareholders at its 2016 annual meeting of Stockholders in June, the company said.

Facebook also reported Wednesday that monthly active users, a key metric for the company also known as MAUs, were 1.65 billion at the end of the first quarter. Wall Street had only expected 1.63 billion, according to StreetAccount.

Wall Street had expected the social media giant to announce a year-over-year quarterly revenue increase of about 48 percent — massive growth for a company Facebook’s size. Facebook’s actual growth came in at 52 percentagainst the comparable year-ago revenue of $3.54 billion, the company said.

But skittish tech investors are carefully watching Wednesday’s announcement after shares in Apple (AAPL) and Twitter (TWTR) plunged on their Tuesday reports.

Facebook held its annual F8 global developer conference earlier this month, discussing a slew of initiatives including its work on artificial intelligence and virtual reality. The most widely heralded announcement of the event, however, was Facebook’s push for chatbots on its platforms.

Chatbots — interactive, responsive messaging programs — could allow users to communicate with brands and companies through Facebook. If successful, such a development would effectively leapfrog the currently dominant mobile app economy and allow the company to create its own thriving digital ecosystem.

At F8, Facebook CEO Mark Zuckerberg announced Messenger Platform beta, which will allow developers to create “natural-language services to communicate directly with people.”

But Zuckerberg also made news during that event for speaking broadly about his company’s goals, saying that “instead of building walls, we can help people build bridges.”

Although Zuckerberg’s remarks were likely partly referencing the tight internet control maintained by countries like China — where Facebook is blocked by the “Great Firewall” — they were also about the ongoing immigration debate in the U.S. where Republican candidates like Donald Trump and Ted Cruz have supported building a wall along the border with Mexico.

A day after that event, a Trump spokeswoman lashed out at the Facebook CEO, saying, “I think I’ll take Mark Zuckerberg seriously when he gives up all of his private security, moves out of his posh neighborhood and comes live in a modest neighborhood near a border town.”

Written by Everett Rosenfeld of CNBC

(Source: CNBC)

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