Facebook’s Solid Quarter Marred By Spending Plans

Facebook beat the Street and grew its ad revenue and userbase, but investors aren’t that happy with its plans to ramp up spending in 2015.

Facebook’s Solid Quarter Marred By Spending Plans
Getty Images / Justin Sullivan

Facebook reported solid third quarter earnings this week. It beat Wall Street expectations, it’s continuing to prove it can make money from mobile — and the news sent its stock down nearly 10 percent. Because investors.

Facebook reported $3.2 billion in revenue, up from $2 billion in Q3 2013. Earnings per share also increased significantly, to 43 cents.

VentureBeat says these numbers “Won’t shape investor sentiment on their own. Mobile ad revenue and user base growth rates are far too important.”

Facebook looks to have those covered, too. Sixty six percent of its quarterly ad revenue was from mobile, up from 64 percent from last year. Daily active users?

“They actually came out 19 percent higher year-over-year. Monthly active users were only 14 percent higher. For a company of Facebook’s size to be increasing their daily active users at that rate, I think that’s something to get pretty excited about.” (Video via Bloomberg)

All that good news stands at odds with some of the headlines, though. Facebook says running its operation is about to get a lot more expensive.

CNBC“If they’re going to really grow long-term moving forward, they have to diversify the types of areas they’re operating in. Is that what people really fear? Because doing that diversifying will cost a lot of money.”

Facebook on Tuesday announced plans to begin more long-term investment in recent acquisitions, including WhatsApp and Oculus.

The Wall Street Journal reports from the earnings call, Facebook expects its expenses to increase in 2015 by as much as 75 percent as a result.

And Wall Street’s reaction was precipitous — at one point it had cut off ten percent of Facebook’s market cap. Before the markets opened Wednesday morning, shares were still down more than seven percent.

This video includes images from Getty Images.