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Learn moreFacebook on Wednesday reported quarterly revenue and profit that beat analysts' estimates on a boom in mobile advertising, boosted by newer ads on Instagram and video.
The owner of the world's largest social network reported $5.38 billion in first-quarter revenue, beating the $5.27 billion analysts projected. Profit excluding some items was 77 cents per share, the company said in a statement, compared to the 63 cents average analyst estimate compiled by Bloomberg. The company also said it's creating a new class of non-voting capital stock, subject to the approval of shareholders.
Facebook has been serving its 1.65 billion users more-immersive videos that play automatically, as well as opening up Instagram, the mobile photo-sharing app, to more advertising. The results show that CEO Mark Zuckerberg has the revenue and profits to invest heavily in future technologies like virtual reality and artificial intelligence that aren't lucrative yet.
With Instagram and video, "they've got these two huge tailwinds to their business," Mark Mahaney, an analyst at RBC Capital Markets, said before the results. "But if you own Facebook stock you're not buying it now because of what they can do with video ads or Instagram, you're buying it because of the potential with their long-term bets like virtual reality."
Facebook stock rose 7% to $116 in extended trading, after gaining less than 1% to $108.89 at the close in New York. The shares have climbed 4% so far this year.
The company reported $1.51 billion in first-quarter net income, or 52 cents a share.
-- Bloomberg News
Source: Facebook Revenue Tops Estimates on Mobile, Video Ad Boom
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