Facebook earnings, revenue beat; shares whipsaw

Onathan Nackstrand | AFP | Getty Images

Onathan Nackstrand | AFP | Getty Images

Facebook delivered quarterly earnings and revenue that surpassed of analysts’ expectations on Wednesday, with climbing 64 percent during the quarter.

The company posted fourth-quarter earnings of 54 cents per share, up from 31 cents a share in the year-earlier period. Revenue increased to $3.85 billion from $2.59 billion a year ago.

Analysts had expected the company to report earnings of 49 cents a share on $3.77 billion in revenue, according to a consensus estimate from Thomson Reuters.

Mobile daily active users were 745 million on average for December 2014, an increase of 34 percent year-over-year, the company said.

Daily active users totaled 890 million, up 18 percent, year-over-year. Meanwhile, monthly active users increased 13 percent to 1.39 billion. Advertising revenue during the quarter was $3.59 billion.

“One interesting thing about Facebook is it has almost the highest gross profit margin of any stock on the S&P 500 at 82 percent. So when they beat estimates, that is going to the bottom line and that is set to propel this stock higher,” said Brian Evans, portfolio manager at Advisor Shares. Evans is a Facebook shareholder.

Facebook has struggled to hold on to its young user base as more social platforms enter the space.

The social media giant has lost some 3.3 million U.S. teens—users between the ages of 13 and 17 years old—since 2011, as well as another 3.4 million users in the 18 to 24 category, according to iStrategyLabs’s 2014 Facebook Demographic Report.

The dispatch, which was compiled based on Facebook’s Social Advertising platform, showed that teens (ages 13-17) on the social network have declined more than 25 percent over the last three years, while users in the 55 and older group soared 80 percent over the same period.

The company completed a handful of notable acquisitions last year, including mobile messaging platform WhatsApp and virtual reality products maker Oculus VR.

Facebook accounted for about 7.8 percent of the global digital ad market in 2014, up from 5.8 percent in 2013, according to research firm eMarketer. Overall, the global digital ad market grew about 21 percent to $146 billion last year.

“The bigger Facebook gets, it cements its position as one of the most dominant players in digital media, and it has the size and reach to change the rules of digital advertising and convince others to play by them,” said Debra Aho Williamson, principal analyst at eMarketer.

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Facebook’s share of the $40.2 billion worldwide mobile ad market reached 18.4 percent last year, according to eMarketer, an increase from 16.6 percent in 2013.

Last quarter, Facebook said mobile ad revenue accounted for about 66 percent of its overall advertising revenue.

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