Facebook announced plans Tuesday to adapt to users sharing more privately as the leading social network pours money into an ongoing battle with “bad actors” out to misuse its service.
Silicon Valley-based Facebook reported that its quarterly profit climbed in the recently ended quarter, but the social network—mired in a spate of controversies—gained fewer users than analysts had expected.
Profit beat Wall Street expectations by jumping 9% to $5.14-billion on revenue that leaped 33% to $13.7-billion in the quarter that ended September 30.
Facebook shares went for a rollercoaster ride in after-market trades as executives revealed quarterly earnings figures along with challenges and opportunities seen in shifting trends in user behaviour.
Shares jumped, dove and then rose anew before staying on higher ground, up 3.1% to $150.80, on the Nasdaq early in the evening in New York.
“Right now, the market is really nervous and it doesn’t take much to move the stock,” said analyst Rob Enderle of Enderle Group.
“As long as they are meeting or exceeding on the bottom line (profit) they will be fine.”
The number of people who used Facebook monthly rose 10% to 2.27 billion, but analysts had expected that figure to be slightly higher.
Facebook has been trying to fend off concerns about how well it protects user data and defends against use of the site to spread misinformation aimed at swaying elections.
Controversies that have battered Facebook since the 2016 presidential election in the US have raised questions over whether co-founder Mark Zuckerberg should keep his post as chief executive.
“Our community and business continue to grow quickly, and now more than two billion people use at least one of our services every day,” Zuckerberg said in an earnings call, including WhatsApp, Instagram and Messenger in the count.
“We’re building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well.”
Facebook users are shifting fast to sharing more privately with messages or a “Stories” feature for creating short photo or video collections, instead of posting in their main feeds, according to Zuckerberg.
While Facebook has made an art of monetising ads in newsfeeds, it has yet to optimise making money from messages and stories.
“This is one of those situations where the community growth we are seeing is outpacing the progress we made on developing ads in that space,” Zuckerberg said of Stories.
“I think we will get there in time, and the opportunity will be bigger, but I can’t tell you what that time frame will look like.”
Facebook is also seeing a rapid rise in viewing videos, which also generate less ad money per minute than newsfeeds.
Zuckerberg said he expected 2019 to be “another year of significant investment” for Facebook, and executives projected revenue growth would slow.
Facebook finished the quarter with 33 606 employees in a 45 increase percent over the number of workers it had the same time last year.
Just weeks ago, Facebook activated a “war room” as a nerve centre to halt misinformation and manipulation of the social network by foreign actors trying to influence elections.
The war room at the company’s Silicon Valley headquarters is part of stepped up security that will include doubling the security team to 20 000 employees.
“The upcoming election will be a real test of the protections we put in place,” Zuckerberg said on an earnings call.
“We will see all the good and bad humanity can do.”
Last week, Facebook said it had taken down accounts linked to an Iranian effort to influence US and British politics with messages about charged topics such as immigration and race relations.
The social network identified 82 pages, groups and accounts that originated in Iran and violated policy on coordinated “inauthentic” behaviour, according to cybersecurity policy head Nathaniel Gleicher.
Gleicher said there was overlap with accounts taken down earlier this year and linked to Iran state media, but the identity of the culprits had yet to be determined.
Spending on security and election-related defences were part of the reason overall costs and expenses reported in the quarter rose 53% to $7.95-billion from $5.2-billion a year earlier.
Zuckerberg said Facebook is up against sophisticated adversaries who continue to evolve.
“These aren’t problems you fix, they are problems you manage,” Zuckerberg said of the challenge.
“There is no silver bullet.”
In what could wind up costing Facebook more money, British finance minister Philip Hammond said he planned to introduce a digital services tax aimed at tech giants from 2020, responding to public outrage over low tax payments by US tech giants.
© Agence France-Presse