Facebook stock jumps after revenue, earnings beat expectations in Q3

Facebook (FB) posted third quarter earnings per share that beat Wall Street’s expectations, boosted by a 28% surge in advertising revenue despite controversies over its data policies, political ads and cryptocurrency plans.

The stock, which closed Wednesday’s trading at $188.25, rallied by over 6% in after-hours trading. Here are the key numbers from the social network, according to a Bloomberg consensus forecast:

  • Adjusted earnings per share of $2.12 vs $1.91 estimates ($1.76 in Q3 2018)

  • Revenue of $17.65 billion vs. $17.35 billion estimates ($13.73 billion in Q3 2018)

The platform saw huge gains in mobile ad revenue, which represented approximately 94% of the quarter’s total ad money.

Meanwhile, both daily active users and monthly active users rose to 1.62 billion and 2.45 billion, respectively — roughly in line with Wall Street’s estimates. Yet costs surged by 32% in Q3 to $10.5 billion, up from $7.94 billion in the comparable year-ago quarter.

“Although engagement levels are a constant concern, Facebook's measure of DAU/MAU has remained consistently high on an overall company basis,” analysts at RBC Capital Markets said in a research note.

"We had a good quarter and our community and business continue to grow," said Mark Zuckerberg, Facebook founder and CEO. "We are focused on making progress on major social issues and building new experiences that improve people's lives around the world."

Wall Street had expected that strong advertising sales would offset the social platform’s multi-front battles over its data practices, ad policies, and its cryptocurrency experiment, Libra. Analysts say Instagram and its shopping-hungry users have become a virtual money-printing press for Facebook, enabling businesses to boost posts as ads.

"Facebook’s ad business continues to outperform, despite intense regulatory scrutiny and negative news coverage,” according to eMarketer Principal Analyst Debra Aho Williamson. "We expect ad growth to come from a variety of places, including the Facebook News Feed, Instagram Stories and shoppable ads on Instagram.”

Social network battered by politics

WASHINGTON, DC - OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg speaks during a House Financial Services Committee hearing October 23, 2019 in Washington, DC. (Photo by Sha Hanting/China News Service/VCG via Getty Images)
WASHINGTON, DC - OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg speaks during a House Financial Services Committee hearing October 23, 2019 in Washington, DC. (Photo by Sha Hanting/China News Service/VCG via Getty Images)

The company has found itself in the crosshairs of Congress, dozens of State Attorneys General and virtually everyone in between. Still, Wall Street estimated that Facebook’s ad revenue would remain firm in the face of a slowing economy, and despite multiple battles over how the platform harnesses user information and earns its advertising dollars.

Facebook has come under intense fire over its refusal to fact-check political ads, which drew heat recently from the presidential campaign of Democrat Elizabeth Warren. On Wednesday, Twitter CEO Jack Dorsey announced that the site was banning political ads on its platform entirely.