Facebook Quarterly Earnings Impress Wall Street
As CEO, Mark Zuckerberg acknowledges problems in the social-gaming side of the business and partner Zynga says it will lay off 5 percent of its staff.
Facebook reported quarterly earnings that impressed Wall Street -- including the fact that it now boasts 1.01 billion people who use the site each month -- sending its shares higher after the closing bell.
Facebook shares, which are down significantly since the company's initial public offering in May, rose 18 cents to $19.50 during the regular session and surged 12 percent after the closing bell.
Facebook's growth, of course, has been extraordinary. In 2004, it had about 1 million active users each month; five years later, it exceeded 500 million, and it recently passed the 1 billion threshold.
Investors, though, weren't sure about how efficiently Facebook could monetize all that usage, especially as more and more people visit their Facebook pages via their mobile devices. On Tuesday, investors seemed satisfied with Facebook's progress.
Facebook said revenue in the third quarter was $1.26 billion, beating the expectations of analysts who had projected about $1.23 billion. Its earnings per share was 12 cents, a penny better than analysts expected.
Advertising revenue grew 36 percent to $1.09 billion, with 14 percent of that coming from mobile.
Chief executive Mark Zuckerberg said Facebook is trying hard to "dispel the myth" that it can't make money on mobile. But he also lamented that gaming on Facebook isn't going as well as he'd like.
Indeed, Zuckerberg said payments from Zynga decreased 20 percent year-over-year. Separately, Zynga said Tuesday that it is laying off 5 percent of its staff, closing its Zynga Boston studio and shutting down 13 of its older games.
Facebook shares were up $2.50 to $22 in after-hours trading. At the end of regular trading Tuesday, the company sported a market capitalization of $42 billion, down from about $104 billion the day it went public five months ago.
Shares of Zynga, meanwhile, were off 12 cents during the regular session to $2.20 and up about a dime after the closing bell. Zynga shares are off more than 75 percent since the company went public 10 months ago.