Facebook shares dip as investors fret over costs, future profit FACEBOOK’S FINANCIALS THE BIGGEST BUSINESSES IN THE US

Facebook reported surging quarterly profit and revenue on Wednesday, helped by its fast-growing mobile ad business, but its shares dipped from a record high in after-hours trading as investors showed some nervousness about future earnings.

The world's biggest online social network, which is nearing the five-year anniversary of its initial public offering, is searching for new types of advertising features to supplement its main revenue streams that it expects to cool off this year.

Facebook's shares fell 2.4 per cent in after-hours trading to $148.12. They had closed at an all-time high of $153.60 on Tuesday.

Chief Financial Officer David Wehner said on a conference call after the company's earnings announcement that ad revenue growth is expected to come down significantly over the rest of 2017, repeating prior company warnings that it is hitting a limit in "ad load," or the number of ads it can squeeze onto users' pages before upsetting them.

Wehner gave similar warnings about ad load in November and in February, although a slowdown has not materialised.

New products, such as ads that play in Quarterly revenue Q4 2014 Q1 Q2 Q3 2015 the middle of videos or appear on Facebook's Messenger app, could fuel growth, but Wehner and Chief Executive Mark Zuckerberg said on Wednesday those plans were still in early stages.

At the same time, the company said expenses would continue at a high level, growing 40 percent to 50 percent this year over 2016 levels and putting a squeeze on future profits.

"As we look into 2017 and beyond, there are going to be a number of initiatives we believe are valuable to the community and to the company in the long term that are going to be net negative on our operating margin," Wehner said.

Facebook's spending contributed to (Share price in $) Q4 Sales

$119.69 bn

Profit

$10.02 bn

Berkshire stake

0.12%

Q1 Q2 Q3 2016 Q4 Q1 2017 the drop in share price after hours, said Josh Olson, an Edward Jones analyst.

"Investors were hoping for some indication that we would see some relief as the year progressed, and we still could. I think that expense guidance range, left unchanged, is probably what is weighing on shares," Olson said.

Facebook said quarterly profit in the first three months of 2017 rose 76.6 percent year-over year to $3.06 billion and total revenue went up 49 per cent to $8.03 billion. The company caused brief confusion on Wall Street by only issuing numbers conforming to Generally Accepted Accounting Principles (GAAP)

without warning. (Share price in $) (Share price in $) Electric-car maker Tesla on Wednesday reported first-quarter revenue that more than doubled, and while saying the upcoming Model 3 was on schedule for July, it downplayed the mass-market vehicle to give a sales pitch for its more expensive Model S.

Chief Executive Elon Musk's bold approach to cars, space explo- ration and clean energy has fuelled investor enthusiasm for Tesla. But skeptics are waiting to see if Musk can fulfill his promise of producing 500,000 cars per year in 2018, or six times Tesla's 2016 production. Shares were down about 2 per cent in after-hours trade following the results.

The automaker's comments underscored the additional challenge of keeping up demand for its older models.

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