Facebook (NASDAQ:FB) investors shrugged off the ongoing controversy surrounding the social network and sent the company’s stock higher after third-quarter earnings that topped analysts’ estimates.
Investors also liked that Facebook said it’s adding $50 billion U.S. to its stock buyback program, sending the company’s share price 2% higher in extended trading following the latest quarterly results.
Facebook’s earnings per share came in at $3.22 U.S. versus $3.19 U.S. per share expected by analysts, according to Refinitiv data. The company’s revenue for the third quarter totaled $29.01 billion U.S. versus $29.57 billion U.S. expected by analysts.
Daily active users on Facebook amounted to 1.93 billion, which matched analysts expectations. Monthly active users of 2.91 billion was slightly lower than the 2.93 billion that had been anticipated by Wall Street.
In announcing its latest financial results, Facebook said it will make significant changes in the next year to focus more on its full-screen video Reels feature, which competes directly with TikTok. It’s part of an effort to make Facebook and Instagram more appealing to users between the ages of 18 and 29.
Facebook Chief Executive Officer (CEO) Mark Zuckerberg kicked off the earnings call with a vehement defense of his company, following an onslaught of reports that stemmed from documents leaked by Frances Haugen, a whistleblower and former Facebook employee.
The internal company documents released by Haugen showed that the number of teenage users of the Facebook app in the U.S. has declined by 13% since 2019, with a projected drop of 45% over the next two years. The number of users between the ages of 20 and 30 was expected to decline by 4% during that time frame, the documents showed.
The reports also show that Facebook is aware of many of the harms its apps and services cause, particularly to teenage girls, but either doesn’t rectify the issues or struggles to address them. More documents are expected to be shared daily over the coming weeks.
The company announced plans to break out Facebook Reality Labs into its own reporting segment starting in the fourth quarter of this year. That unit focuses on hardware, augmented reality and virtual reality products. The other revenue segment will come from its family of apps, which include Facebook, Instagram, Messenger, WhatsApp and other services.
Facebook said it expects its investment in the hardware and virtual reality segment to reduce operating profit in 2021 by approximately $10 billion U.S. The company said it expects fourth-quarter revenue of $31.5 billion U.S. to $34 billion U.S. Analysts were projecting sales of $34.8 billion U.S.
In July, Facebook announced the formation of a team that would work on the metaverse — digital worlds in which multiple people can interact within a three-dimensional (3D) environment.
