Facebook Beats Wall Street Q1 Estimates, Reveals $3B Hit From FTC Probe
Facebook reported strong first-quarter results, with solid growth in users and revenue, though the company said it has incurred a loss of between $3 billion-$5 billion from a federal probe into its data use practices.
Total revenue rose 26% to $15.077 billion, ahead of Wall Street analysts’ consensus forecast. Earnings per share dropped 50% from a year ago to 85 cents, when a charge due to an inquiry by the Federal Trade Commission is factored in. Without that charge, earnings would have been $1.89, well ahead of analysts’ estimate of $1.63 a share.
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The company estimated the hit from the FTC probe of the platform and data use practices at $3 billion, but said the loss could reach $5 billion. “The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome,” Facebook said in its official earnings release Wednesday.
The investigation and the settlement of the related fine, which is reported to be the largest ever levied against a tech company, stems from the company’s entanglement with now-defunct data firm Cambridge Analytica. The company, which had a contractual relationship with Facebook, admitted to tapping into user data without proper disclosure and consulting with Donald Trump’s 2016 campaign, among others, to target Facebook users.
Investors have generally shrugged off issues surrounding data use, regulatory hurdles or political pressure when evaluating Facebook, focusing instead on its robust financials. The company’s stock has gained 35% in 2019 to date, and climbed about 5% in after-hours trading after closing at $182.58.
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Tallies of both daily and monthly active users both increased 8%, with DAUs at 1.56 billion and MAUs at 2.375 billion.
“We had a good quarter and our business and community continue to grow,” CEO Mark Zuckerberg said in the release. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”
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