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Facebook Reports Strong 1st Quarter With $8 Billion in Revenue

- By Sydnee Gatewood

Facebook Inc. (FB) reported better-than-expected first-quarter earnings on May 3, announcing it would no longer provide figures for non-GAAP expenses, income, tax rate or earnings per share.

The social media giant reported GAAP EPS of $1.04, exceeding analyst estimates of 87 cents. Revenue of $8.03 billion also surpassed expectations of $7.84 billion. These figures increased significantly from the same quarter a year ago. In first-quarter 2016, Facebook reported EPS of 60 cents on $5.38 billion in revenue.

In addition, the company beat user growth expectations. Facebook reported a 17% year-over-year increase in monthly active users to 1.94 billion while the expectations were 1.91 billion. Daily active users came in at 1.28 billion versus the expected 1.26 billion, an 18% increase from a year ago.

Despite the beat, shares were down 0.64% in after-hours trading.

The company generated $3.06 billion in net income, a 76% year-over-year increase from $1.7 billion in the prior-year quarter. Advertising sales of $7.86 billion for the quarter were up 51% from a year ago. The average revenue per user was $4.23.

The company's costs were $4.71 billion, a 40% increase from $3.37 billion a year ago as Facebook's head count grew by 40% from 2016.

After facing backlash in regard to promoting fake news articles and allowing violent or extreme Facebook live video content to remain posted on its platform, CEO Mark Zuckerberg promised before the earnings call to hire thousands of workers over the next year to monitor sensitive content.

The company is also facing stiff competition from Snap Inc. (SNAP), which went public at the beginning of March. The popular image-sharing platform is in direct competition with Facebook's Instagram. The two companies have been constantly updating their services' features in a fierce battle to attract users and advertisers. Snap is scheduled to report its first earnings results as a public company on May 10.

Facebook has a market cap of $432.5 billion; its shares were trading around $151.8 on Wednesday with a price-earnings (P/E) ratio of 43.5, a price-book (P/B) ratio of 7.4 and a price-sales (P/S) ratio of 15.9.

Among the gurus invested in Facebook, Andreas Halvorsen (Trades, Portfolio) is the largest shareholder with 0.66% of its outstanding shares. In all, 32 other gurus also hold the stock.

Disclosure: I do not own any stocks mentioned in the article.

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This article first appeared on GuruFocus.