Facebook proposes new class of stock as revenue and profits soar

Analysts had high expectations for Facebook's first-quarter earnings, and the company exceeded those, with revenue growing by 52%.

April 27, 2016 2:56 PM PT

reporting from SAN FRANCISCO — While Apple and Twitter have struggled lately to meet analysts’ earnings expectations, Facebook held on to its mantle as the poster child for tech world growth, reporting increases in revenue, profit and users as it posted first-quarter earnings Wednesday.

For the three months ending March 31, the social network recorded $5.38 billion in revenue, up from $3.54 billion in 2015. It brought in $2.2 billion in profit, up from $1.8 billion over the same period last year.

Analysts had expected the company’s revenue to grow 48% over the same period last year. The company exceeded these expectations; revenue grew by 52%.

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The company’s stock rose 6.6% in after-hours trading to $116.17.

The bulk of the company’s revenue came from mobile advertising, which comprised 82% of total ad revenue. This was up from 73% in the first quarter of 2015.

“Facebook just keeps getting stronger and stronger every quarter,” said Debra Aho Williamson, principal analyst at EMarketer. “Its share of digital advertising is continuing to grow, and it is steadily adding new revenue streams.”

The company also announced plans — pending shareholder approval — to create a new class of nonvoting capital stock, known as Class C capital stock. For every share of Class A or B stock that investors own, Facebook will offer two Class C shares as a one-time dividend.

The move could help ensure that Chief Executive Mark Zuckerberg can keep making big acquisitions and funding his philanthropic ventures without diluting his voting power.

Facebook did not disclose details about the financial performance of its acquisitions in its quarterly report, so it’s unclear how Instagram, WhatsApp and its virtual reality headset, Oculus Rift, have done.

The company has exceeded estimates for every quarter but one since it went public in 2012.

Twitter: @traceylien

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