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Business

Facebook profit soars, but growth might slow

Facebook has reported a mind-boggling increase in third-quarter profits. But following a growth warning for the rest of the year and beyond, investors made the company's shares tumble in after-hours trading.

The world's largest online social media network reported a staggering 166-percent jump in profit for the third quarter year-on-year. Earnings in the three months to the end of September amounted to $2.4 billion (2.4 billion euros).

Facebook said the increase came on the back of a greater-than-expected 56-percent rise in quarterly revenue to $7.01 billion, showing the company was claiming a larger share of the online advertising pie.

However, in a call with analysts, Facebook Chief Financial Officer David Wehner said ad growth would likely slow due to limits on "ad load," or the number of ads that the firm could put in front of customers without alienating them.

Mobile ads accounted for 84 percent of Facebook's total advertising revenue in the third quarter, compared with 78 percent a year earlier. The company said it surpassed the one-billion mobile-only monthly users' threshold last quarter.

More spending ahead

Wehner also warned that 2017 would be a year of aggressive investment, leading to a substantial increase in expenses.

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The growth warning saw investors send Facebook shares down by 7 percent in after-hours trading despite the strong earnings that beat Wall Street estimates.

The social media network said it hired 1,200 employees in the quarter under review, boosting its total workforce to 15,700.

hg/jd (Reuters, AFP)

 

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