Despite Scandalous 2018, Facebook Reports Record Profit

2018 was perhaps the most troubled year for Facebook in terms of scandals and regulatory scrutiny it faced. And while analysts believed that these would have an impact on the overall financial performance of the company, the largest social media platform of the world surprised most by posting strong fourth quarter financial results which beat the estimates of analysts in terms of revenues and earnings.

The results also clearly indicate the degree of detachment of Facebook’s business success from its public reputation. The company even faced a blow even on Wednesday as Apple Inc pulled it up for the violation of its rules by running a program in which users as young as 13 years were paid for installing an app that surveilled them.

For the final three months of 2018, Facebook reported record profit of $6.88bn against profits of $4.27bn that the company reported for the same period a year ago. There was a 30 per cent increase in revenues for the quarter at $16.64bn.

There was 9 per cent year on year growth in daily active users and monthly active users – the two key usage metrics. According ot the latest estimates of Facebook, it now has 2bn daily active users for at least one of its multiple social media platform – Facebook, Instagram, Messenger and WhatsApp.

The better than expected results by the company saw its shares rise by 8 per cent in after-hours trading in the US and elsewhere.

One of the most important aspects of the usage metrics was that the growth was almost evenly distributed throughout all geographic regions. There was some growth in usage numbers in Europe and North America. Following the second quarter 2018 peformance of facebook indicating stagnation in the earnings growth in North America and decline in Europe, there was steep drop in its shares in July.

The company is now sketching out a path to go forward from the constant damage control mode that it was forced to be in 2018, said executives Mark Zuckerberg and Sheryl Sandberg on a conference call with investors. There was an attempt for both the executives to describe the 2018 challenges Facebook faced – which included allegations of misuse of private data of users, use of the platform misinformation and allegations lack of pro-activeness of the company, and foreign influence operations, to be “social issues” which are inherent for the internet as a whole and was not a peculiar problem for Facebook only.

Facebook had “fundamentally changed how we run this company”, stressed Zuckerberg, and added that the company has significantly enhanced its systems for tackling such problems in the future. This would, as a consequence according to him, help the company to renew its focus on product development in 2019m t\so that it is able to “deliver more experiences that meaningfully improve people’s lives” through creation and offering of innovations in messaging, payments, groups, video and hardware.

“Facebook might have delivered its weakest quarterly revenue growth since listing in 2012, but these numbers are actually some of the most reassuring in its short history,” said George Salmon, an equity analyst at Hargreaves Lansdown.

“The way that I feel starting 2019 is that we have clear roadmaps looking at what we need to do,” Zuckerberg said. “I do feel like we’ve started to turn a corner and have a clear plan for what we need to do now.”

(Adapted from Reuters.com)

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Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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