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Investors Business Daily
Technology
BRIAN DEAGON

Facebook Beats Q3 Estimates But Sees More Losses Of U.S. Users

Facebook reported third-quarter results late Thursday that came in well above Wall Street estimates, including user growth. Facebook stock fell sharply Friday.

The social media giant reported adjusted earnings of $2.71 per share on revenue of $21.5 billion. Wall Street expected earnings of $1.90 on revenue of $19.8 billion, according to FactSet.

Facebook stock is still forming a cup base with a 304.77 buy point.

Facebook said daily active users climbed 12% to 1.82 billion, above estimates of 1.79 billion. Monthly active users also rose 12% to 2.74 billion. Wall Street expected 2.7 billion.

But daily and monthly active users in the U.S. and Canada "declined slightly" from the previous quarter, which was elevated by the pandemic.

"In the fourth quarter of 2020, we expect this trend to continue and that the number of DAUs and MAUs in the U.S. and Canada will be flat or slightly down compared to the third quarter of 2020," Facebook said.

Meanwhile, average revenue per user was $7.89, above estimates of $7.32.

"We continue to make significant investments in our products and hiring in order to deliver new and meaningful experiences for our community around the world," said Mark Zuckerberg, chief executive, in written remarks.

Ad Revenue Unhindered By Boycott

Facebook confronted a broad advertiser boycott during July, with more than 1,000 brands deciding to pull ads from the social network to protest the company's policies on hate speech and misinformation. However, ad revenue climbed 22% from the year-ago period.

"We expect our fourth quarter 2020 year-over-year ad revenue growth rate to be higher than our reported third quarter 2020 rate, driven by continued strong advertiser demand during the holiday season," Facebook said.

Facebook ended the quarter with $55.62 billion in cash and equivalents.

Facebook stock climbed as much as 41% from its May breakout to a top on Aug. 26.

To find the best stocks to buy or watch, check out IBD Stock Lists and other IBD research.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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