Facebook posts $3 bn profit in Q1

The problem that faces Facebook today is still the same problem that Facebook was facing when we wrote The Contrarian piece.

Social networking site Facebook began 2017 on a high note, posting upbeat results for the first quarter ended March (Q1).

Facebook shares slipped as low as $145.45 in extended trading following the report, after declining less than 1 percent to $151.80 at the close in NY. However, FB stock is still up by almost 30% even after accounting for the after-hours fall. Using Snapchat-inspired features on its own platform gives Facebook ample head start against its rivals in these markets.

Facebook Inc. delivered a strong headline beat, smashing past Wall Street estimates on the top line as well as bottom line.

- Payments and other fees revenue were $175 million was down 3%. Advertising revenue is expected to take a further beating the third quarter as Facebook continues to fight ad blockers on desktops. However, at less than 2.5% contribution to overall revenue of Facebook, the shrinking payments revenue isn't something FB stock investors need to worry about.

Facebook's non-advertising products, such as its Oculus virtual reality headset and the Workplace office software, now generate little revenue.

The figures indicate that a quarter of the world's population now uses Facebook every month, with most of the new users coming from outside of Europe and North America.

Some analysts ascribed the share price fall in part to Facebook's spending. The company earned $3.06 billion, or $1.04 per share, in the January-March period.

"Facebook has to approve ads before they're shown and they typically won't approve one that's considered unsafe".

According to research from business intelligence company App Annie, 35 per cent of Snapchat users in the U.S. do not use Facebook on a daily basis. We translated revenue for the three months ended March 31, 2017 using the prior year's monthly exchange rates for our settlement currencies other than the USA dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

Analysts on average had expected monthly active users of 1.91 billion, according to financial data and the analytics firm FactSet.

- Asia-Pacific ad revenue grew at 60% while rest-of-the-world ad revenue grew 66%. And rightfully so, as it is the most populated region, and where Internet adoption rate has reached new heights. This underlines the importance of native advertising, and the potential in targeting millennials on Facebook with relevant content they are willing to share.

Will Facebook Growth Slowdown Anytime Soon? That could create tougher comparisons for Facebook in the second quarter. Ad load won't be a significant contributor to revenue even after this year, the company said. Even though Facebook continued to warn of a deceleration in ad load, analysts were nearly euphoric about Facebook's growth prospects, pointing to a successful transition to video and revenue possibilities with Instagram. But this will change in mid-2017 as CFO David Wehner said that Facebook has maxed out how many ads in can squeeze into people's news feeds.


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