Countering fake news, hate speech takes a toll on Facebook.

More hiring to counter fake news, hate speech takes toll

In a closely watched report, Facebook announced earnings Tuesday that were roughly in line with Wall Street analysts’ expectations, with the company reporting $13.7 billion in revenue on Tuesday. Net income was $5.1 billion.

Though its sales were up 33 percent from the $10.3 billion the Menlo Park company reported during the same period last year, the company’s costs increased 53 percent to $7.9 billion; as a result, its net income only rose 9 percent over the third quarter of 2017.

Facebook has repeatedly warned investors that costs would increase as it hired thousands of workers to deal with problems of fake news, spam and hate speech on the social network. Its shares fell 20 percent in late July, wiping out $119 billion in market capitalization, after the company’s secondquarter earnings report.

“We will continue to invest heavily in security and privacy because we have a responsibility to keep people safe,” CEO Mark Zuckerberg said on a call with analysts on Tuesday.

The investments in security will help with profitability, Zuckerberg said, and will not take away from spending on new product areas.

The company said it had 1.49 billion daily active users on average in September, up 9 percent year over year. There were 2.27 billion monthly active users at the end of September, up 10 percent from the same time a year ago. Facebook’s usage, particularly among younger users, has been a closely watched measure of the service’s health.

About 2.6 billion people use Facebook, Messenger, WhatsApp or Instagram every month, the company said.

Facebook was expected to report revenue of $13.8 billion, an increase of 34 percent from a year earlier, according to analysts surveyed by Bloomberg. Operating profit was estimated to be $5.79 billion, according to Bloomberg’s survey.

Brian Wieser, a senior analyst at Pivotal Research Group, pointed to “systemic issues” at the company, which has struggled to persuade users and advertisers to trust it. Last year, Facebook admitted that millions of users had personal data taken without their permission by British firm Cambridge Analytica; this year, it revealed several problems with measuring the performance of video ads.

“The underlying problem that we see is that the company has been so focused on growth at any cost that it has failed to sufficiently invest in processes that might anticipate problems, acknowledge problems fast enough or fix problems fast enough,” Wieser wrote in an Oct. 17 note to clients.

Facebook has lost more than $200 billion in market value since the company’s record high in July, according to Bloomberg. The company has dealt with a privacy breach, the departure of Instagram co-founders Kevin Systrom and Mike Krieger and continuing issues with misleading headlines being spread on the website in recent months.

Wieser said that he didn’t think the company had a handle on the gravity of its safety issues.

“They’ve been too optimistic of their own business for how bad the problem is ... the risks are to the downside from their guidance,” he said.

Wieser said Facebook’s third-quarter results were not as bad as they could have been, though revenue growth was less than expected.

“So far, the numbers look not terrible in the sense that relative to expectations, it does look like for current quarter purposes, revenue growth was a little lighter than expected,” Wieser said. “Profitability was up substantially, relative to expectations. Although it does appear taxes would be part of that.”

The stock closed at $146.22 on Tuesday. Shares rose 1 percent in after-hours trading.