Facebook Shares Plunge Even Though Earnings and Revenue Smash Estimates

Shares of Facebook Inc declined by 2.5 percent in after-hours trading on Thursday after the company said its revenue might slump later this year after it stops increasing the frequency of marketing spots in the news feed in an attempt to avoid driving away users.

The announcement hit investors hard and caused Facebook’s shares to reverse lower, paring gains added after the California-based company revealed its earnings and revenue that smashed estimates.

Revenue for the three-month period to March 31st was reported to rise 49.3% to $8.03 billion, up from $5.38 billion in the same period last year. The result beat first-quarter revenue expectations calling for $7.83 billion. Net income reached $3.06 billion, or $1.04 per share, up from $1.74 billion, or 60 cents per share.

The number of monthly active users jumped 17 percent to 1.94 billion while the number of daily active users climbed 18% to 1.28 billion. Analysts had expected the former to hit 1.91 billion and the latter to reach 1.256 billion.

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