Facebook Inc. (FB, Financial) reported its fourth-quarter and full-year 2017 earnings after the market closed Wednesday.
While the social media giant handly beat expectations, investors and Wall Street were concerned about changes to the news feed and the potential for consumers to spend less time on the platform.
These fears lead to shares falling in after-hours trading before the earnings call began. Once the earnings call began, however, and the company was able to go into more detail, share reversed upward.
Analyst and investor concerns
The social media platform wants to shift the focus of its content away from news and advertising and toward user-generated content.Â
During the call, Chairman and CEO Mark Zuckerberg said, "In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day."
This restructuring has caused concern among investors and advertisers alike as they feel the move will infringe upon the company's profitability.Â
He went on to say that by focusing on meaningful connections, "our community and business will be stronger over the long term."
From this statement, it is clear the company wants to update the quality of the news feed in order to improve user experience, which will result in more time spent of the platform in the long run.Â
Earnings
Facebook reported quarterly revenue of $12.97 billion and adjusted earnings per share of $2.21, beating Thomas Reuters' expectations. The company's earnings were impacted by a one-time charge related to the Tax Cuts and Jobs Act.
Fourth-quarter ad revenue grew 48% due to higher ad prices.
For the full year, revenue increased 47% to $40.65 billion.Â
Other financial results
- Daily active users (DAUs) averaged 1.4 billion, an increase of 14% year over year.
- The number of monthly active users (MAUs) increased 14% year over year to 2.13 billion on average.Â
- Mobile ad revenues represented 89% of revenues, up from 84% in the fourth quarter of 2016.
- Capital expenditures were $2.26 billion for the quarter and $6.73 billion for the year.
Disclosure: I do not own shares of Facebook.
