Facebook posts $3 bn profit in Q1

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Facebook on Wednesday said first-quarter profit surged 76% to $3.06 billion, allaying concerns that questions over video-ad performance and the spread of violent and graphic content would mar growth. Most of the revenue came from advertising business.

Advertisements that play in the middle of the videos or pop-up ads that appear on Facebook's Messenger app are expected to contribute in the growth, but Wehner and Chief Executive Mark Zuckerberg confirmed that those plans were still in early stages.

- Ad revenue was $7.9 billion, up 51%. That gives Facebook a 16.2 per cent share of the worldwide digital ad market, behind Google's 33 per cent. Of late, Facebook has received a lot of criticism for failing to act fast on some of the most disgusting and disturbing videos posted live by users.

Shares of Facebook have gained 16% in the past three months, outperforming the S&P 500 SPX, -0.13% which rose 4%.

Brian White of Drexel Hamilton, who has a "buy" rating on shares of Snapchat, expects Snapchat to hit 171 daily active users in the first quarter of the year, keeping it behind Facebook in terms of that metric.

Desktop ad revenue also grew 22% despite a decline in desktop usage, which it says is a result of efforts to counter adblocking.

- Total revenue was $8 billion, up 49%.

Facebook is closing in on 2 billion users. The rivalry is something that both companies have seemingly avoided in public statements (aside from some not-so low key shade), but Facebook CEO Mark Zuckerberg subtly touched upon it during the company's earnings call yesterday. "That's why they are spending so much money there", Williamson said.

"We're going to start today with all the basic effects that you're used to, [including] facemasks, art frames, and style transfers", Zuckerberg told F8 attendees, last month. Even though Facebook continued to warn of a deceleration in ad load, analysts were nearly euphoric about Facebook's growth prospects, pointing to a successful transition to video and revenue possibilities with Instagram.

Facebook may be running out of room for ads in people's news feeds, but it's starting to put ads in so many other places that ad load on Facebook may be stagnating, but ad load across Facebook just beginning to ramp up. It also tweaked a setting so sound is on by default in some videos, a move created to appease advertisers. Advertisers are concerned that users will drop off a video once they see an ad in the middle of a video. We made only minor adjustments to our estimates and are maintaining our $135 fair value estimate for Facebook. In addition, research has shown that Facebook specifically seeks to sell ads based on insights it has gleaned from users concerned with such issues as body confidence and weight loss. He added that Facebook wants to come up with the first AR ecosystem for the masses. Still, questions remain about why video of the crime remained on Facebook's platform for part of the day.

Wall Street will be closely watching the event as it's likely to provide a clearer picture into the status of Facebook and Snapchat's ongoing competition.