Facebook shares fall despite Street-beating quarter

July 30 00:40 2015

Facebook shares fell 2% in after-hours trading on growing concerns over rising expenses despite a Street-beating quarter that showed continued growth from the giant social network. The Menlo Park, Calif.-based company reported revenue jumped 39% to $4.04 billion in the second quarter, up from $2.91 billion a year ago. But expenses grew far faster. Net income fell 9.1% to $719 million, or 25 cents a share, compared with $791 million, or 30 cents a share, a year ago.Free Voice Calling For US Android Users Introduced By Facebook

Excluding certain expenses, Facebook said it would have earned 50 cents a share. Analysts had expected adjusted earnings of 47 cents. Facebook had warned investors that costs and expenses would rise dramatically as it invests in long-term projects such as virtual reality as well as in recruiting top engineers and building new data centers.

A growing number of advertisers are turning to Facebook to reach digital consumers, especially on smartphones and tablets. Mobile advertising revenue accounted for 76% of advertising revenue in the quarter. Research firm eMarketer expects Facebook to control 16% of the $69 billion mobile ad market this year. Google is expected to capture 35%. Consumers continue to spend a lot of time on Facebook. The number of users who check their account at least once a month grew to 1.49 billion from 1.44 billion last quarter. Of those users, 968 million check their account every day, up from 936 million in the first quarter.

“Facebook’s rate of user growth actually picked up this quarter, which makes for a dramatic contrast with Twitter. In fact, Facebook added more daily active users in the U.S. alone in the quarter than Twitter added monthly active users globally,” said Jan Dawson, chief analyst with Jackdaw Research, says the quarter still showed impressive growth. “Facebook growth shows no sign of slowing down, which is incredible when they’re just shy of one and a half billion users.” Facebook is also making money from that growth in users, Dawson says. “The Street must have been expecting something pretty outlandish to react as badly as it has, because this is a really solid set of results,” he said.