"With 2.27 billion monthly active users, it is still the platform where most consumer engagement with brands is happening online".
Facebook is keeping costs in check better than some investors anticipated but is facing challenges growing users, causing shares to swing in both directions after the third-quarter results.
Shares of Facebook were up about 3 per cent to US$146.22 after initially falling as much as 5 per cent following the bell, when they had closed up 2.9 per cent at US$146.22.
But even more important than the numbers, analysts pointed to the company's conference-call comments that reduced investor uncertainty about Facebook's future. And when you're talking about security issues and some of the safety and content issues, these are not problems that we fix. After that, he said "I know that we need to make sure our costs and revenue are better matched over time". "And we will never be ideal".
Shares (Berlin: DI6.BE - news) in Facebook, down 20% in the year to date ahead of Tuesday trading, rose nearly 3% in the regular trading session on Wall St just before the status update was revealed.
After an unpleasant earnings surprise three months ago, investors on Tuesday were largely looking for the company to avoid a repeat of its second-quarter revenue miss and warning of slower growth and increased spending.
In reaction, Aegis' top analyst Victor Anthony reiterates a Buy rating on Facebook stock, while slightly raising the price target to $215 (from $206), which implies an upside of 40% from current levels.
James Cordwell, analyst at Atlantic Equities, described the results as "likely something of a relief to the market".
But Christopher Rossbach, chief investment officer at J Stern & Co which has Facebook stock within its portfolios, said: "Defying the recent market turmoil and poor sentiment, Facebook delivered a good quarter that should reassure investors".
For the quarter, Facebook reported sales of $13.73 billion and earnings of $1.76 per share, ahead of estimates of $13.78 billion and $1.47. Monthly active users totaled 2.27 billion, up 10% from a year earlier. The idea of ephemeral messaging was made popular by its rival Snap with its Snapchat app; Instagram and Facebook later adopted the same concept. In the first quarter, Facebook boasted 282 million users in Europe.
The company disclosed its latest gaffe on Tuesday, saying that its misclassification of user activity had led to immaterial overcounting of monthly and daily users.
The social network was the subject of a cyber attack last month and has been at the centre of a data privacy debate in the wake of the Cambridge Analytica scandal that was revealed in March. Monthly active users, meanwhile, were up to 2.27 billion-a ten percent jump compared to previous year. Estimates were for 2.292 billion and 1.508 billion, according to Refinitiv averages.
"Over the last few years ... people were consuming more public content, like passive video consumption and news".
"Young users are deleting the app and all users are taking breaks from Facebook", said Natasha Lamb, managing partner at Arjuna Capital.
The company will also be tested next week when Americans vote in the November 6 midterm elections.