Facebook Soars Amid Tough Year
Facebook Inc. posted record quarterly profit despite a drumbeat of negative headlines, prompting CEO Mark Zuckerberg to say the social-media giant has turned a corner and plans to focus this year on building new products. The fourth-quarter earnings show that advertisers continue to see Facebook as a powerful platform for reaching consumers and that users aren’t abandoning the company in large numbers even as its data-privacy practices have been under attack. Mr. Zuckerberg said the company was emerging from a period in which it focused on getting its security practices in order and this year planned to put more emphasis on innovation.
Over the past 18 months “building new experiences wasn’t a priority,” he said. “We’re still going to make mistakes along the way, but we now have a clear sense of the path ahead.” Investors cheered the results as well as the shift in tone from Mr. Zuckerberg. Facebook’s stock rose nearly 12% to about $168 in after-hours trading. Before Wednesday, Facebook shares had fallen about 34% since the company’s July earnings call, when Facebook warned of slowing revenue growth and rising expenses due to increased investment in security measures.
Despite the stellar financials, it has been a grueling period for the social media giant. The company has been embroiled in a series of scandals revolving around its use of data and its role in spreading false information and fomenting a range of other misdeeds. Bombshell reports by the New York Times, the UK’s The Guardian and PBS Frontline have had Facebook back on its heels, with execs testifying before Congress and attempting a media charm offensive to own up to mistakes.
Ahead of earnings, and with scrutiny growing among European regulators, the company this week took steps toward establishing a board with up to 40 members that will have oversight of content across Facebook. The goal of the board is to reduce instances of bullying and hateful expression that violates community standards. Like Twitter and other platforms, Facebook has tended to take a laissez-faire view of content on its platform, but an increasing number of cases of hate crimes, election interference and even genocide facilitated by Facebook has forced the company’s hand. “Our community and business continue to grow,” said Mark Zuckerberg in the company’s earnings release. “We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect.”