Facebook Earnings: Social Media Giant Posts Huge Revenue Increase, But Profits Are Way Down

Facebook Inc.’s advertising business has grown the fastest since the company went public in May 2011, helping the company’s revenue grow to $1.585 billion.

That’s 40% higher than a year ago, when the social networking company drew in a comparatively small $1.131 billion in the same time period.

But profits have fallen sharply: a year ago, fourth quarter profits at the company were $302 million, or 17 cents a share. Today, profits for that same time period are down to $64 million or 3 cents a share. So Facebook’s stock prices are tumbling, decreasing today by roughly 5.9% to $29.40. That’s a major cut in overall value and not good at all in the short term for the company’s profits; it peaked at a debut price of $38/share and has never recovered.

Mobile ads grew to 23% of total ad revenue, which constitutes approximately 84% of Facebook’s total income. Advertising nets Facebook roughly $1.33 billion, but mobile advertising generates far less revenue than laptop and desktop browser ads on a per-ad basis. CEO Mark Zuckerberg says investors and analysts underestimate how much money Facebook can make on smartphones in the future, and directed a razor-sharp effort towards expanding the company’s mobile advertising share. As a result, it is expected to beat titan rival Google in that market in 2012.

Other ideas for Facebook to increase revenue have been varied, and include the recently introduced Featured Posts and Facebook Gifts features, as well as standalone apps such as Poke, Facebook Camera and an improved version of Facebook Messenger.

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Tom McKay

Tom is a staff writer at Mic, covering national politics, media, policing and the war on drugs. He is based in New York and can be reached at tmckay@mic.com.

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