Facebook and its scandals are something every tech geek is tired of. The company has had so many scandals over the past three to four years that it has been setting aside money to settle cases. The data breaches, permission issues, fake news, misinformation, and the list goes on. There are many such scandals Facebook had to go through. There were also rumors floating that there could be a hierarchy turnover as the investors are getting edgy with the behavior of the company.
That being said, the company is trying hard to calm the investors down. The situation is panicky for the investors because the profits earned are of no use as the cases to be settled are far more in number. Facebook has surprised all the analysts with its profits. There is a reason for the same and that is the brand of Facebook. Advertisers will trust Facebook because of the users it has and the revenue won’t stop increasing and the profits won’t stop coming in.
A senior analyst, Haris Anwar says the same. He told ET, “This is a strong report suggesting that advertisers still see value in Facebook’s platform, as they did before the controversies and scandals erupted.”
The revenue of the company has risen from $12 billion last fiscal year to $15.1 billion in the first quarter of this year. The analysts were beaten here as well. The monthly active users of Facebook also increased by 8% to 2.4 billion people as per the forecast.
That being said, the company has managed to the right notes amidst all the scandals. There is a lot of reasoning happening from the investors even after the growth charts showing positivity. For that, the company has set aside $3 billion for the settlement of cases and the accumulation of all the settlement money could go up to $5 billion. This will cut the net income of the company to $2.43 billion. Also, this penalty between $3 billion to $5 billion will be the largest ever civil penalty paid to the agency.
This will calm the investors down as most of them were worried about the federal cases lasting for months together. The investors had a reason to be worried because the expenses of Facebook are going to increase from 44 percent to 55 percent this year.