Facebook loses more users in Europe as its growth continues to cool

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Facebook is keeping costs in check better than some investors anticipated but is facing challenges growing users, causing shares to swing in both directions after the third-quarter results.

Chief (Taiwan OTC: 3345.TWO - news) executive Mark Zuckerberg told them that earnings would continue to face pressure as Facebook moved to improve the user experience, particularly in video.

"When you're talking about security issues and some of the safety and content issues, these are not problems that we fix, right?" Zuckerberg said. "I think that this is the future".

"We will see all the good and bad humanity can do". "We will never be flawless, but I'm proud of the work we're doing here", he said. That revenue growth marks the slowest growth rate in Facebook's history.

Facebook's spending has ballooned from licensing more engaging content such as video, and as it tries to fortify itself against fraudsters and hackers.

But shares later turned negative and swung wildly as company bosses warned in a call with analysts that it was expecting expenses to leap in 2019.

James Cordwell, analyst at Atlantic Equities, described the results as "likely something of a relief to the market".

Mobile advertising revenue accounted for 92 percent of advertising, up from 88 percent in Q3 2017.

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In Q3, Facebook's operating margin was 42 per cent, 2 per cent lower than a year before.

Following the release of the earnings report and news of poor user growth, Facebook's stock dropped by three percent in after-hours trading, but the reveal of the company's higher-than-expected revenue helped to boost the stock price.

It has also run into problems retaining European users and growth in the U.S. is sluggish, with only 1 million monthly active United States users coming on board in the last quarter. "Core Facebook revenue growth will continue to slow due to impression growth from lower monetizing geos and products, the data privacy initiatives impact on pricing growth, and the shift from Newsfeed to Stories inventory which carries lower CPMs/lower ad loads".

While messaging apps may be just one part of Facebook's business, it is a very important part. In the first quarter, Facebook boasted 282 million users in Europe. Despite the platform being careless with our data and letting it fall into the wrong hands time after time again, we are still using the social network to interact with our friends and family members. The company does not break down user growth numbers for its other services, including WhatsApp, Instagram or Messenger.

Emerging businesses Instagram and WhatsApp also have yet to pick up the slack from flattening usage of Facebook.

The results fell short when it came to revenue, daily active user and monthly active user estimates in the company's latest earnings report, despite exceeding analyst expectations on earnings per share. Estimates were for 2.292 billion and 1.508 billion, according to Refinitiv averages.

Facebook's headcount was 33,606, up 45pc on a year ago, largely driven by the need to increase resources around the checks and balances needed to police the social network for so-called fake news, harmful content and possible breaches.

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