Facebook Shares Fall on Guidance, Higher Costs

Facebook reported quarterly earnings last Tuesday that beat analysts’ expectations. Revenue from advertising came in at $2.96 billion, up 64 per cent from a year ago. Total revenue for the quarter was $3.2 billion with earnings per share of 43 cents. This beat street estimates of earnings per share of 40 cents and $3.12 billion revenue estimates. Monthly active users increased to 1.35 billion, up from 1.19 billion a year ago.

A disappointing outlook for the fourth quarter caused investors to worry about margin sustainability. The company warned in the conference call that costs would rise dramatically in 2014 with revenue expected to slow in the fourth quarter. The firm projected that costs will increase between 50-70 percent next year as the company looks to invest in talent and new areas such as video.

Shares fell 10 percent in after hours trading.



By: Alex Serin

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