Facebook expects a moderation of costs related to the fight against scandals after 2019

(Reuters) – Facebook Inc (FB.O) eased investors on Tuesday by predicting that margins would cease to contract after 2019 as the costs of the scandals dwindle, leading to higher shares despite a second consecutive quarter of record user growth.

The CEO, Mark Zuckerberg, reiterated the company's warning that the growing interest of users for private messaging, video and safer content would increase costs faster than revenue for a certain time".

That same recommendation, three months ago, caused the biggest single-day sell-off of Facebook, while some investors were expecting terrible results. The third quarter performance and revised forecasts suggest that the downward trend will be more gradual and that it will ease after 2019, financial analysts said.

Facebook shares rose about 3% after updating its forecasts. They reversed the course several times, falling and gaining up to 5%, in an hour of volatility after the close of Tuesday up 2.9% to $ 146.22.

Facebook, Amazon.com Inc (AMZN.O) and Google parent Alphabet Inc (GOOGL.O) had been beaten last month on Wall Street after conducting a multi-year rally. The slowdown in growth is a major concern and Facebook's weak results did not dispel these fears.

"The best news was that the quarter was just not a disaster," Ivan Feinseth, an analyst at Tigress Financial Partners, told Reuters.

The company expects revenue growth to slow in the current quarter compared with the previous quarter, which could be the worst performance since its IPO in 2012.

The main service of Facebook and his brother Messenger have recorded a monthly increase in the number of users reaching 2.27 billion, up 10% from the previous year, but a percentage point below the expectations and pace of the last trimestre.

According to Zuckerberg, the problem with Facebook is that users are more interested in features such as direct messaging and video playback that they can not find the way to place ads there while attracting clicks and not annoying users.

The challenge is that the majority of new users come from countries such as India, Indonesia and the Philippines, where advertisers are focusing more on television, print advertising and outdoor advertising, said responsible for Facebook.

Average revenue per US and Canadian user grew 6.7% in the third quarter compared to the same period last year. Growth for users in the Asia-Pacific was 4.6%.

Although factors are slowing down ad prices, they also offer Facebook significant untapped business opportunities with new businesses such as WhatsApp. Nevertheless, Facebook said that WhatsApp would not be a revenue engine in 2019.

Some financial analysts fear that the company's operational problems are so important that revenue growth and cost containment will not happen as expected.

The company unveiled its latest blunder on Tuesday, saying its misclassification of users' activities had resulted in intangible overconsumption of monthly and daily users.

More generally, the reputation of the social network has suffered from a data breach affecting 29 million users in September and a privacy scandal involving a British political consultancy in March.

He has also been shaken by the war of national and international information about his services, including WhatsApp and Instagram, and by a wave of leadership departures.

About 2.6 billion users interact with at least one of Facebook's services each month, up from $ 2.5 billion when the figure was released for the first time last quarter, pointing out that its potential audience of advertisers was second to none .

Facebook's spending has skyrocketed due to licensing of more appealing content, such as video, and increased efforts to crack down on fraudsters and hackers.

Zuckerberg said the upcoming elections would be a test of his new systems, which he says will be fully installed by the end of 2019.

"With a community of more than 2 billion people, we will see all the good and the bad that humanity can do. And we will never be perfect, "he said.

Total expenses in the third quarter climbed to nearly $ 8 billion, up 53% from last year. The operating margin, which, according to Facebook, is expected to fall by around 35%, fell by 2 percentage points from the previous quarter, reaching 42%.

The company estimated that its spending in 2018 would increase by 50% to 55% over last year, reducing the previous range by 60%. It expects spending to increase by 40% to 50% in 2019.

Total sales for the third quarter amounted to $ 13.7 billion, up 33% from the same period last year and in line with expectations, taking into account currency fluctuations.

Quarterly earnings of $ 5.1 billion, or $ 1.76 per share, grew 9% and exceeded the average estimate of $ 1.48 per share.

(GRAPH: Facebook revenue growth slowing down – tmsnrt.rs/2CO7xgt)