Facebook Jumps On Earnings Report Then Falls
Facebook Inc. (NASDAQ:FB) reported earnings yesterday that blasted analysts’ expectations. Thanks to strong mobile ad revenues, the social network delivered earnings of $0.25 per share. This is a 60 percent rise from the same quarter last year. These figures rounded to $2.02 billion, which left many investors in a frenzy of late trading.
Share Price Hits All Time High
During the call investors were extremely impressed with the first part of the message from CFO David Ebersman. Because of the high numbers, an immediate rise in price was seen as investors began a frenzy of after-hours trading. This caused the share price to jump up to an all-time high of $56 per share. However, this euphoria was to be short-lived.
Bad News Causes Shares Shed Price
In the latter part of the call, Ebersman noted several facts that disturbed investors and caused the stock to shed most of its gain. He told investors that the social networking giant would not be boosting the number of ads its users see in their newsfeeds. This is important because the increase in ads has been one of the largest factors in Facebook’s revenue growth.
The CFO also noted that the number of teens using Facebook to connect with friends is significantly lower on a daily basis. He pointed out that the overall number of teenage users remains stable, the network has been losing teens to newer services like Snapchat and Instagram (which is owned by Facebook). Ebersman was careful to note that Facebook is still the dominating force in the social networking sphere.
Facebook Leadership Sold Shares
We reported on August 13 that Sheryl Sandberg, Facebook’s COO sold out 2.4 million shares of her stock in the company at roughly $38 per share. This was the same price the stock initially hit the market at back in 2012. The sales was valued at $91 million. No doubt she is wishing she had held on to those shares just a little bit longer. Oh well, hindsight is 20/20.
Disclosure: The author has no position in the stocks mentioned in this article, and does not intend to initiate any position in the next 48 hours