Facebook shares drop despite reporting outstanding quarterly results

Facebook (NASDAQ: FB) reported outstanding first quarter financial results, but its shares fell instead of going up during the extended trading hours on Wednesday.

The social network giant’s stock declined 2.5% to $148.01 per share—a sign that investors are concerned about the company’s financial performance in the future.

During the first three months of the year, Facebook generated earnings of $1.04 per share, up 7% from $0.60 per share in the year-ago quarter. Its revenue rose 49% from $5.38 billion to $8.03 billion.

The social network giant exceeded the $0.87 in earnings per share and $7.83 billion in revenue estimated by Wall Street analysts.

Facebook’s income from operations climbed 66% from $2.01 billion to $3.33 billion. Its operating margin rose from 37% to 41%.

Facebook close to reaching 2 billion MAUs

Its daily active users (DAUs) were 1.28 billion and monthly active users were 1.94 billion, an increase of 18% and 17% year-over-year, respectively. Its mobile advertising revenue represented approximately 85% of its $7.86 billion advertising revenue.

Facebook said its capital expenditures for the first quarter were $1.27 billion. The company ended the quarter with $32.31 billion in cash, cash equivalents, and marketable securities.

“We had a good start to 2017. We’re continuing to build tools to support a strong global community,” said Facebook founder and CEO Mark Zuckerberg.

Facebook warns of decline in as revenue growth

The company’s CFO David Wehner once again warned investors that its advertising revenue growth could decline “meaningfully” over the next quarters this year. He made similar warnings in the past that Facebook is reaching a limit in ad load.

Rob Sanderson, an analyst at MKM Partners, told Bloomberg, “A great quarter, but what comes next. We’re just kind of in this wait-and-see mode in terms of the impact on the business. We don’t know how much ad load has driven growth.”

On the other hand, Facebook COO Sheryl Sandberg stated that they “carefully track the impact of ads on the user experience. We’ve said that ad load was up from a few years ago and we’ve been able to do that by improving the quality and the relevance of the ad.”  She added that they are continuing to focus on those aspects.

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