Facebook reports loss after shareholder payouts

Second quarter costs and expenses nearly quadrupled, up 295 per cent to $1.93bn from the same period last year reports The BBC.

Excluding staff share schemes, Facebook would have made a profit of $295m.

The figures compare with a $240m profit in the same period last year.

In its statement, Facebook said the rise was driven primarily by “share-based compensation expense”.

Shares fell 11 per cent in after-hours trade in New York to a record low of $23.94.

In May, investors had queued to snap up Facebook shares for $38 each.

Sales rose 32 per cent to $1.18bn for the three months to the end of June.

But, according to BBC technology correspondent Rory Cellan-Jones, that rise in revenue may have been due to all the hype surrounding the company’s stock market share sale.

The number of monthly active users (MAUs) rose 29 per cent from the same period last year to 955 million, but some analysts question the reliability of this data given the number of bogus profiles on the social network.

Facebook has yet to resolve how it generates profits as users move from the computer desktop version to accessing the site via mobile phone.

The company is now making less money from each user as it becomes more difficult to generate advertising revenue.

Its operating profit margin fell to 43 per cent in the period compared with 53% a year earlier.

Shervin Pishevar, managing director of Menlo Ventures, and a Facebook shareholder, told the BBC that he was not worried about the company’s share price.

“I don’t think there’s any kind of predictions you can make in the short term. We take a very long term view [and] all of the numbers are incredibly exciting,” he said.

He added that the rise in mobile users was interesting.

“It’s driving a lot of growth for Facebook in terms of where people are spending their time and their money.”

David Phillips, a lecturer at the University of Gloucestershire on communications and social media, questioned whether Facebook could really make any money from mobile devices.

“I’m not sure it’s advertising, I think it may be engagement that’s going to generate the revenues for them,” he said, citing games such as Farmville. “Engagement on mobile is very, very addictive.”

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