Photo: Firmbee from Pixabay.

Facebook (Nasdaq: FB) has had a tough few weeks in the news. Since the release of the “the facebook files” on the Wall Street Journal, Facebook’s public image has taken a beating. The continuous revelation by whistleblower Frances Hagen on Facebook’s culture has not done the company much good either. But despite that, the company’s profits just keep climbing.

Facebook’s Financials

Facebook’s Q3 revenues grew 35% to $29.1 billion, falling behind the market’s estimates of $29.55 billion. Adjusted EPS surpassed the expectations with $3.22 against the market’s forecast of $3.18.

Advertising revenues grew 33% to $28.3 billion and other revenues grew 195% to $734 million.

Daily active user (DAU) numbers for the core Facebook app grew 6% to 1.93 billion and monthly active users (MAU) grew 6% to 2.91 billion. The number of people active on any one of its family of products, which includes WhatsApp and Instagram, grew 12% to 3.58 billion people per month in the quarter. Daily active users on these applications grew 11% to 2.81 billion.

For the fourth quarter, Facebook expects total revenues of $31.5-$34 billion. The market was looking for EPS of $4.02 on revenues of $34.78 billion for the fourth quarter and an EPS of $14.16 on revenue of $119.66 billion for the current fiscal year.

Facebook’s Product Upgrade

Facebook continued to release several new products during the quarter. Recently, it announced the launch of its smart glasses as part of a collaboration with Ray-Ban. The glasses have dual integrated 5MP cameras, allowing the user to capture photos and videos from a first-person perspective with either the capture button or Facebook Assistant voice commands. The glasses also include LED lights that light up to alert people nearby that the user is taking a photo or video. They include streamlined, open-ear speakers, as well as three-microphone audio, built-in for rich voice and audio transmission for calls and videos.

Overall, Facebook is focusing on three key product priorities – creators, commerce, and building the next computing platform. Within the creators, it is focusing on Reels, which is the primary driver of engagement profiles. It is making significant changes to Instagram and Facebook in the coming year to focus on video and to make Reels a more central part of the experience, and to make it more attractive to the younger demographic, which appears to be leaving Facebook for other services such as TikTok.

Its next product priority is commerce to help people discover new products that they’re interested in and reach customers inside their apps. As Apple’s changes make e-commerce and customer acquisition less effective on the web, solutions that allow big businesses to set up shop right inside Facebook’s apps will become increasingly more attractive. It is building solutions similar to ads that can point to either a business’s website or their shop on its platforms, thus helping businesses increase their market reach. The marketplace is already at scale and Facebook is working on improving its Shops offering to help businesses identify what works to find new customers and grow their businesses even faster.

Finally, it is building its next computing platform, the metaverse. Facebook believes that the metaverse will be a game-changer for its social media offering. So much so that the company is planning on a rebrand of its name to support this vision. Over the next decade, new platforms like metaverse are expected to start to unlock different kinds of experiences for users. Besides enhanced social experiences, metaverse will lead to increased demand for virtual goods. For instance, people will need digital clothes, digital tools, and different experiences. It is targeting the metaverse to reach a billion people and hundreds of billions of dollars of digital commerce. The platform will need significantly expanded VR and AR products, along with a new operating system and development model.

The biggest news for Facebook, though, has been the scandal surrounding the leaked documents by whistleblower Frances Haugen. As more and more documents come to light, the news about how Facebook continued to ignore warnings of harmful effects its services were having on teens and the population of various countries is staggering. But the company still refuses to fully admit its role in the events. During the recent quarterly announcement, Mark Zuckerberg continued to downplay the impact of Facebook on the polarization of its subscribers. He believes that social media is not the main driver of the issues because some of these issues have been existent for a while. Facebook believes that it is addressing some of those issues by investing more in higher safety standards. It now has over 40,000 people handling security on its platform. It is on track to spend more than $5 billion on safety and security in 2021. But, a lot of this appears to be too little too late.  

Its stock is trading at $312.22 with a market capitalization of $880.31 billion. It had climbed to a 52-week high of $384.33 in September. It hit a 52-week low of $244.61 in January.