Shares of Facebook on the Nasdaq stock index, pictured here during its initial public offering in May 2012, soared Wednesday after the social networking giant released a first quarter earnings report that obliterated analysts expectations. The earnings report showed $5.38 billion in revenue between January and April and earnings of 77 cents per share from a net income of $2.2 billion -- up nearly 200 percent from the same period a year ago. The company said most of the increase is due to a rise in mobile advertising revenue. File Photo by John Angelillo/UPI |
License Photo
MENLO PARK, Calif., April 27 (UPI) -- Social networking giant Facebook smashed analysts' expectations for first quarter earnings on Wednesday -- news that sent shares soaring on Wall Street and earned founder Mark Zuckerberg an extra $4 billion effectively overnight.
The Menlo Park, Calif.-based company on Wednesday revealed its earnings report for Q1 2016, which stated adjusted non-GAAP revenue of $5.38 billion -- a figure that's about $120 million more than experts had predicted. The report also lists a net income of $2.2 billion, or 77 cents per share, which amounts to a staggering 195 percent increase over the same quarter last year.
The biggest factor in the explosive earnings: Mobile advertising revenue, which totaled about $4 billion between January and April, the company said.
"We had a great start to the year," Zuckerberg said. "We're focused on our 10-year road map to give everyone in the world the power to share anything they want with anyone."
The 31-year-old chief executive was referring to a near-term vision he announced earlier this month that aims to connect the world's 7 billion people by establishing Internet access in every corner of the Earth, through a variety of technological developments and investments.
Facebook's revenue figure for the first three months of 2016 is nearly $2 billion more than the company reported during the same period last year, and the 77 cent earning per share is up from 42 cents from the first quarter a year ago.
Along with its earnings report, Facebook also announced plans for a 3-for-1 stock-split -- an introduction of non-voting Class C stock shares, which would allow the social giant to dilute shares so that Zuckerberg can donate the majority of his stock -- which he pledged to do in December, for charitable purposes -- and still retain control of the company.
The Class C stock split concept, utilized by Google in 2012, would create 5.7 billion new shares of Facebook without the loss of voting rights for executives and current investors.
Under the proposal, each share of Class A (publicly held) and Class B (executive held) stock will receive two shares of the new Class C stock. If the plan is approved, Facebook said the split will take effect immediately.
In announcing his company's first quarter performance on Wednesday, Facebook founder Mark Zuckerberg also noted forthcoming changes in the social giant's stock structure and updates on his philanthropic vision for the future. "In the last few months, we launched Reactions, rolled out Live video, built Messenger into a platform, shipped Oculus Rift and have now connected 25 million people to the internet. We've also worked day after day on lots of small improvements to make your experience better," he said. Graphic courtesy Mark Zuckerberg/Facebook
"Everything we do at Facebook is focused on our mission to make the world more open and connected," Zuckerberg said in a memo to investors Wednesday. "This [new] structure has helped us resist the short term pressures that often hurt companies. It has helped us grow our community, build our business and create shareholder value. It has given us the freedom to prioritize your product experience and invest in new apps like Instagram -- decisions that don't always pay off right away, but that we believe help us serve our community and our shareholders."
"Thanks for being a part of this journey to connect the world," he added in a Facebook post.
The plan to introduce new stock, filed with the U.S. Securities and Exchange Commission on Wednesday, was approved by Facebook's board of directors but still needs to be approved by shareholders -- which will likely come during a meeting in June.
Four years ago, some investors recoiled at Google's plan to split its stock -- fearing it would give top executives too much control -- but eventually settled the matter before court proceedings. Some experts believe Facebook's plan is likely to see far less resistance given the company's remarkable recent earnings, stellar Wall Street performance and substantial confidence in Zuckerberg's continued leadership.
"While helping to connect the world will always be the most important thing I do, there are more global challenges that I feel a responsibility to help solve -- like helping to cure all diseases by the end of this century, upgrading our education system so it's personalized for each student, and protecting our environment from climate change," he said in Wednesday's memo. "That's why Priscilla [Zuckerberg] and I created the Chan Zuckerberg Initiative and committed to give 99 percent of our Facebook shares during our lives to advance human potential and promote equality.
"[The 3-for-1 stock split] will allow us to achieve both goals. I'll be able to keep founder control of Facebook so we can continue to build for the long term, and Priscilla and I will be able to give our money to fund important work sooner. Right now, there are amazing scientists, educators and doctors around the world doing incredible work. We want to help them make a bigger difference today, not 30 or 40 years down the road."
As Zuckerberg spoke of his ambitious philanthropic vision for the future Wednesday, the stellar earnings report sparked trading that put a lot more muscle behind his own pocketbook.
Shares of Facebook (Nasdaq: FB) soared on Wall Street after the earnings report's release -- adding $4.2 billion to his net worth and briefly making him the sixth richest person in the world.
Forbes' real-time rankings, however, showed Zuckerberg in seventh place by Wednesday evening, behind Oracle founder Larry Ellison, with a total net worth of $47.5 billion.
