Facebook Slips Despite Solid Q1 Earnings Beat

Mark Zuckerberg

In an interview with Business Insider on Wednesday, Facebook CFO Dave Wehner reiterated his previous comments that revenue growth from the News Feed will slow going into the second quarter. About 1.25 billion people will access their Facebook account via a mobile phone this year, up 10.2 percent over last year. "We're continuing to build tools to support a strong global community." said Facebook founder and CEO Mark Zuckerberg.

Facebook Inc shares fell $3.23 (-2.13%) to $148.57 in after-hours trading Wednesday.

"A great quarter, but what comes next?" asked Rob Sanderson, analyst at MKM Partners.

That helped the social network grow its net profits by 76% to $3.06bn.

Wall Street will be closely watching the event as it's likely to provide a clearer picture into the status of Facebook and Snapchat's ongoing competition.

"They don't want to tank next quarter".

To reflect slightly lower near term advertising outlook driven by a reduction in ad load growth, the firm is lowering its FY:17 estimate for revenue to $38,763 million from $40,750 million, while establishing Q2 and FY:17 GAAP EPS estimates of $1.15 and $5.14. Therefore, FB appears like a solid play for value investors.

There have been though, concerns raised over its handling of graphic and violent video content, particularly live streamed footage in recent weeks.

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The company also make efforts to take on fake news and live video murders.

Facebook in the past few years has depended on its social network - a mobile-advertising machine - to fund investments in other areas, which are much less developed as businesses.

Did Facebook let advertisers target teens with low self-esteem? The next wave of ad revenue growth is expected to come from price per ad and subscriber growth. But the world's biggest social network is a powerhouse in online advertising.

There was no mention of music during the earnings call: a reflection of the fact that while the music industry is intensely interested in Facebook's moves on the licensing front, analysts don't yet see it as significant enough to ask questions about.

Along with Facebook, Mark Zuckerberg also announced the monthly active users of its other apps. Google and Facebook together accounted for an astounding 99% of revenue growth from digital advertising in the U.S. previous year, according to an analysis of IAB estimates by Pivotal Research senior analyst Brian Wieser.

That would give Facebook a 22.6 per cent share of the worldwide mobile ad market, with archrival Google of Alphabet Inc projected to be the leader with a 35.1 per cent share, according to eMarketer.

Facebook also has some prominent new competition from a year ago: Snap, which went public this spring.

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