Earnings

Facebook Traffic Stalls, Stock Gets Slammed

Facebook is looking to reassure investors that its digital advertising business has a future of strength ahead of it, despite slightly slipping usage and a coming reboot to its News Feed.

Overall, Facebook reported a 47 percent jump in quarterly revenue year-on-year, and on the conference call following the release, executives talked up the expansion potential on the horizon. But there were some concerning numbers as well — Facebook reported that time spent on the site by users had fallen about 50 million hours per day, which was enough to drag Facebook's share's down 4 percent in after hours trading.

“I want to be clear: The most important driver of our business has never been time spent by itself. It’s the quality of the conversations and connections,” Chief Executive Mark Zuckerberg said on the post-release call with analysts, noting that changes coming to the platform would add to its overall strength.

Chief Operating Officer Sheryl Sandberg highlighted changes the social network had made to limit the distribution of disinformation via Facebook, noting that they could, in fact, lead to “more monetization opportunities.” Sandberg further noted optimism for the potential “stories” on Facebook and Instagram have for generating ad revenue in the future.

Chief Financial Officer David Wehner said the average price per ad increased 43 percent in quarter.

“They said average revenue per ad was up a lot, that quality of ads has improved, and that the engagement declines were not meaningful,” Wedbush analyst Michael Pachter said. “In other words, better quality engagement and better ability to target ads. The street probably likes that."

The falling time, Facebook says, is the result of limiting viral videos distribution.

And Facebook's user base somehow keep growing, up 14 percent from a year earlier, but still below the 1.41 billion analysts were anticipating.

The number of daily users in the United States and Canada fell for the first time in Facebook’s history, dipping in the company’s home market by 700,000 from a quarter earlier to 184 million. Facebook confirmed they are expecting fluctuations in the future.

Facebook's net income during Q4 increased to $4.27 billion, or $1.44 per share, up from $3.56 billion, or $1.21 per share, a year earlier.

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