Stocks of Facebook fell down following a 51% rise in expenses

Facebook beat on the top and bottom lines; however, the stock went down more than 7% on Wednesday after the company declared surging costs and expenses and a thinning operating margin.

Take a look at some crucial numbers:

  1. Earnings (EPS):$2.56 vs. $2.53 per share forecast by Refinitiv.
  2. Revenue: $21.08 billion $20.89 billion forecast by Refinitiv.
  3. Daily active users (DAUs): 66 billion vs. 1.65 billion forecast by FactSet.
  4. Monthly active users (DAUs): 5 billion vs. 2.5 billion forecast by FactSet.
  5. The average revenue per user (ARPU): $8.52 $8.38 forecast by FactSet.

Facebook’s costs and expenses for the complete year of 2019 was about $46.71 billion, escalated by 51% when compared to its total expenses in 2018. That syncs up with a fall in the company’s operating margin, which decreased from 45% in 2018 to 34% in 2019.

Facebook provided a revenue growth of about 24.7% compared to a prior year, resulting in the fourth straight quarter that the company reported sub-30% growth. Sheryl Sandberg, Facebook’s COO declared that the company now has more than 8 million advertisers, up from 7 million in October 2019.

On Wednesday, the company also declared a $10 billion share repurchase program.

“We had a good quarter and a strong end to the year as our community and business continue to grow,” Mark Zuckerberg, Facebook’s CEO said in a statement. “We remain focused on building services that help people stay connected to those they care about.”

Facebook stated it estimates more than 2.89 billion monthly users in its group of apps, compared to 2.8 billion in the prior quarter. This metric is used to calculate the total user of Facebook’s base across its main app, Messenger, Instagram, and WhatsApp.

Getting ready for an “intense year”

In the U.S. and Canada, the user base of Facebook increased to 190 million from 189 million a quarter earlier. In Europe, its user base rose to 294 million from 288 million active daily users in the prior quarter.

Zuckerberg said during a call with an analyst that Facebook is getting ready for an “intense year” that is going to include the 2020 U.S. election. Zuckerberg stated it is his duty and goal to better communicate policies of the company regarding numerous issues.

“My goal for this next decade isn’t to be liked, but to be understood,” he said. “Because in order to be trusted, people need to know what you stand for.”

Facebook will mainly aim at privacy in 2020 because of the company’s July 2019 settlement agreement with the Federal Trade Commission that was worth $5 billion, Zuckerberg said. The company, however, is still due for paying the penalty as the agreement is still pending court approval, David Wehner, Facebook’s Chief Financial Officer said.

“It’s going to take time but over the next decade I want us to build a reputation on privacy that’s as strong as our reputation already building good, stable services,” Zuckerberg said.

Over the past year, Facebook has faced numerous regulatory challenges.

Hello, I’m Anna Yeo. If you like my news coverage, please drop a good word in my inbox. I’m journalist by profession and have been part of many major reporting across the globe. I like to write crisp and factual news. I have completed my masters degree in journalism. Feel free to contact me at [email protected]

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