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Facebook earnings: Profits jump, but user growth disappoints

Facebook: Cybersecurity, election "war room"
Facebook: Cybersecurity, election "war room" 06:13

After alerting investors to increasing costs and slowing growth, Facebook reported profit that topped expectations and added additional users despite a difficult year for the social-media giant.

The earnings come as the company navigates a harsh year in which it has had to fend off threats of regulation and deal with a massive privacy breach and public discontent over its ability to curb misinformation before another U.S. election

"We have a long road ahead to prevent these type of attacks in the future," Mark Zuckerberg told an earnings call of the hacking involving 29 million user accounts late last month. "The upcoming election will be a real test of the protections we've put in place," he added.

Revenue rose 33 percent to $13.73 billion in the third quarter, the company reported, just shy of estimates of $13.78 billion. Facebook's total number of regular users totaled 2.27 billion in the quarter, up from 2.23 billion in the previous three months but below analyst forecasts of 2.29 billion.

The social network giant reported quarterly net income of $5.14 billion, or $1.76 per share, which surpassed Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for earnings of $1.46 per share.

"Overall, given all the challenges Facebook has faced this year, this is a decent earnings report," said eMarketer analyst Debra Aho Williamson.

Shares fell 5 percent in after-hours trading immediately after Facebook posted its latest results, then rebounded before heading down again, lately off by 2.9 percent.  

"Facebook was a market darling, but some now see it as the embodiment of evil. Facebook has had more than its share of mishaps over the past year, with data scandals and accusations of bias, but this too shall pass," Clement Thibault, a senior analyst at, said by email.

Ahead of its earnings release, Facebook shares ended 3 percent higher in Tuesday's regular-hours trading, closing at $146.22. They've declined 35 percent since hitting a record high on July 25 amid worries the social network's usage has flat-lined. 

After an unpleasant earnings surprise three months ago, investors on Tuesday were largely looking for the company to avoid a repeat of its second-quarter revenue miss and warning of slower growth and increased spending.

"Facebook is still a company with revenue growth, zero debt and multiple products ingrained in people's daily lives. The rumors of its death are, without question, premature," Thibault said. "Over a cycle, stocks naturally go in and out of favor with investors." 

-- The Associated Press contributed to this report.

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