Facebook beats profit estimates and shares surge, as it sets aside US$3 billion for US privacy penalty
- Shares of the world’s biggest online social network jumped more than 10 per cent to US$200.50 in after-hours trade
Facebook on Wednesday blew past Wall Street profit estimates in the first quarter and set aside US$3 billion to cover a settlement with US regulators, calming investors who had worried about the outcome of a months-long federal probe.
Shares of the world’s biggest online social network jumped more than 10 per cent to US$200.50 in after-hours trade. They have now regained much of the ground lost last year amid slowing growth and costs associated with the company’s privacy scandals.
The settlement accrual, which Facebook set at US$3 billion but said could rise to as high as US$5 billion, cut the company’s net income in the first quarter to US$2.43 billion, or 85 cents per share.
Excluding the charge, Facebook would have earned US$1.89 a share, up from US$1.69 in the year-ago quarter and easily beating analysts’ average estimate of US$1.63 per share, according to IBES data from Refinitiv.
Total first-quarter revenue rose 26 per cent to US$15.1 billion from US$12.0 billion last year, again beating analysts’ average estimate of US$15.0 billion.
“This is a strong report suggesting that advertisers still see value in Facebook’s platform, as they did before the controversies and scandals erupted,” said Haris Anwar, senior analyst at financial markets platform Investing.com.