Facebook Shares Pop on Earnings Beat Despite Whistle Blower News

Shares of social media giant Facebook were heading higher in Monday’s trading session after the company reported better than expected third quarter financial results even though revenue missed estimates.

For the third quarter, the company reported earnings of $3.22 compared to $3.19 expected ny analysts per Refinitiv. Revenue at $29.01 billion was lower than the $29.57 billion expected, per Refinitiv.

Daily active users (DAUs) came in at 1.93 billion, which was in line with analysts according to StreetAccount.

Monthly active users however were slightly below the 2.93 billion expected per StreetAccount and were 2.91 billion.

Average revenue per user (ARPU) was $10 compared to the $10.15 expected by StreetAccount.

Facebook also announced plans to break out its Facebook Reality Labs into its own reporting segment starting in Q4.

Looking ahead at the fourth quarter the company had also announced that it expects revenue of $31.5 billion to $34 billion. This came in below the $34.8 billion that analysts had been expecting.

Facebook additionally said that it is adding $50 billion to its stock buyback program, which helped push shares up about 2% in extended trading.

It also helped that CEO Mark Zuckerberg said on the earnings call that Facebook will make significant changes in the next year to focus more on its full-screen video Reels feature, which competes directly with TikTok.

“Over the last decade as the audience that uses our apps has expanded so much and we focus on serving everyone, our services have gotten dialed to be the best for the most people who use them rather than specifically for young adults,” Zuckerberg said.

The CEO warned that “this shift will take years, not months, to fully execute” and that ultimately it will be as significant to Facebook as the adoption of the News Feed and Stories features.

“Reels has the potential to be something of that scale,” he said.

In recent weeks Facebook has been making headlines after Frances Haugen, a whistleblower and former employee had leaked documents showing that the company’s apps and services cause harm to teenagers.

Zuckerberg rebutted the claims and referred to the latest news cycle as “a coordinated effort to selectively use leaked documents to paint a false picture of our company.”

“The reality is social media is not the main driver of these issues and probably can’t fix them by itself either,” Zuckerberg said. “We should want every other company in our industry to make the investments and achieve the results that we have.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.