For the fourth fiscal quarter, Facebook (NASDAQ:FB) posted earnings of $2.21 per share on a revenue of $12.97 billion beating most Wall Street expectations that the company would post $1.95 per share in earnings on a revenue of 12.55 billion.
Revenue of the company on a per-user basis is up by 27% year over year to $6.18 with their profits totaling to $4.26 billion compared to the $4.7 billion profits the company posted during the third quarter led by huge taxes charged to the company.
Slowest User Growth
During the earnings report, Facebook stated that there has been a decline in the daily user growth of the social media site. However, the company assured that the site’s profitability would remain due to its advertising sales.
According to Facebook executives, the changes that are being made would be beneficial to the business on a long-term basis and may not affect the business even in the short-term period.
According to Facebook chief executive officer Mark Zuckerberg, changes are being made on the site including cutting down the amount of viral videos shown on the news feed which would cut the amount of time spent by users. This led to a decline of 700,000 daily active users in the United States and in Canada.
The monthly user count of the company is no at around 2.13 billion compared to the 2.06 billion monthly users during the third quarter representing a rise of 3.39%.
Facebook Shares
Shares of Facebook rallied prior to the release of its fourth quarter earnings report on expectations from the market that the company would post massive profits especially from its digital advertising business which was expanded by the company during the past couple of months.
Facebook shares hovered below its all-time high which is 1% higher prior to the earnings release. However, the shares of the company slipped following the announcement that Facebook would place personal interactions between users over the time spent on the social media network as a priority.
According to Facebook co-founder Mark Zuckerberg, the company would make changes that would lead to users cutting as much as 50 million hours per day while the CFO of the company David Wehner stated that more financial opportunities could open up for the company as users engage with posts from friends more. Zuckerberg also stated that helping people maximize the time spent on Facebook usage is more important which is for the well-being of the people and the overall society.
Shares dipped by more than 4% during the after-hours trading on Wednesday after recovering by 2% following comments from Facebook executives that the prices of advertising have increased making up for the decline in the daily users of the site.