Social media giant Facebook Inc. (FB, Financial) reported its third-quarter results after the market closed Nov. 1.
The California-based company posted earnings per share of $1.59, beating estimates of $1.28. Quarterly revenue of $10.3 billion beat expectations of $9.84 million and increased 47% from the prior-year quarter.
The company registered 2.07 billion monthly active users, which surpassed estimates of 2.06 billion by a narrow margin and increased 16% year over year.
The trend in Facebook’s revenue growth is illustrated in the graph below.
Shares initially rose after the report was released to around $185 but fell to nearly $179 after the company provided its 2018 expense forecast.
In order to combat fake news and hate speech on the platform, CEO Mark Zuckerberg emphasized costs would go up.
“We're serious about preventing abuse on our platforms,” he said. “We're investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits."
During the conference call, Chief Financial Officer David Wehner said Facebook’s operating expenses will increase 45% to 60% in 2018 as it will invest more in security and original content. The company also plans to double the number of workers dedicated to eliminating unwanted content to 20,000 by the end of next year.
Facebook’s advertising revenue grew 49% to $10.1 billion during the quarter. Mobile advertising accounted for 88% of total advertising revenue, an increase from 84% in the year-ago quarter.
The operating margin for the quarter widened to 50% of revenue from 44% a year ago. Headcount grew 47% to 23,165.
Among the 38 gurus invested in Facebook, Frank Sands (Trades, Portfolio) has the largest position with 0.52% of outstanding shares. Other top guru shareholders include Spiros Segalas (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Steve Mandel (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio).
Facebook has a market cap of $519.1 billion; its shares were trading around $178.74 on Thursday with a price-earnings (P/E) ratio of 38.69, a price-book (P/B) ratio of 7.80 and a price-sales (P/S) ratio of 15.92. According to GuruFocus data, the stock has gained nearly 60% year to date.
Disclosure: I do not own the stock mentioned.
