Facebook Shares Slip On Cost Growth Warning

A leap in mobile advertising revenue helped Facebook almost double profits in its third quarter but shares fell 10% after it warned on higher costs ahead.

The Facebook profile of founder Mark Zuckerberg on a mobile phone is seen in this photo illustration taken in Lavigny

The social network’s figures, which confirmed profits at $801m (£496m) and a 59% jump in total revenues to $3.2bn (£1.98bn) over the three months, were well above analysts’ expectations.

Mobile advertising revenue made up 66% of total ad revenue in the period – indicating Facebook is succeeding in steering advertisers to its mobile platform at a time when most of its users are using Facebook on phones and tablets.

Though Facebook’s results surpassed expectations, investors sent the company’s stock down by almost 11% in after-hours trading – spooked by comments during a conference call that 2015 would be a “significant” year for expenses.

Facebook said it expected costs to grow by 55% to 75% next year as it ramps up investment in its workforce, grows existing products and invests in new areas such as WhatsApp, Oculus and video.

This year, Facebook spent $22bn in cash and stock to buy the messaging service WhatsApp and about $2bn on virtual reality company Oculus.

It also re-launched Atlas, a tool for marketers to better target people across “devices, platforms and publishers” and to measure how well the ads work.

Facebook had 1.35 billion average monthly users as of 30 September, an increase of 14% from a year earlier.

Subscribe for notification