Facebook Inc (NASDAQ:FB) saw its shares take a tumble after the social media giant delivered fourth-quarter results that beat analyst expectations, but failed to exceed them by enough to appease investors.
The figures, delivered after the close on Wednesday, showed earnings per share of US$2.56 in the quarter, a touch above estimates of US$2.53, while revenues rose 25% year-on-year (YOY) to US$21.08bn, compared to forecasts of US$20.9bn.
READ: Facebook plans to add 1,000 jobs this year in London as it continues to grow its biggest engineering centre outside the US
However, the earnings beat – 1.2% higher than forecast – was the lowest in Facebook’s history, while its YOY sales growth of 24.6% was the slowest it has ever recorded.
One silver lining was the firm’s number of active users, which increased 8% in the quarter to 2.5bn, a touch above predictions of 2.49bn, although slow user growth in North America was a concern with the firm adding only 1mln new users in the US and Canada.
The company also unveiled an unexpected US$550mln settlement as part of a class-action lawsuit concerning its use of facial recognition technology in the US state of Illinois.
London Capital Group’s Jasper Lawler said that the slowing user growth came at a time when costs for Facebook were rising as the social media firm tries to defend itself from criticism over ‘fake news’ and political advertising.
“We think Facebook’s revenues can pickup again but the costs will be harder to bring down before the November US election”, he said.
Facebook shares dropped 6.8% to US$208 in early New York trade on Thursday.
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