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Profit jumps at Facebook despite regulatory pressure

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Profit jumps at Facebook despite regulatory pressure
(FILES) In this file photo taken on January 15, 2019 a man holds a smartphone with the logo of social network Facebook in Nantes, western France. - Winning back trust is seen as the key priority for Facebook as the world's biggest social network readies its financial update on the final months of 2018 on January 30, 2019. Facebook is looking to rebound from a horrific year marked by a series of scandals over data protection and privacy, and concerns that it had been manipulated by foreign interests for political purposes. (Photo by LOIC VENANCE / AFP) (Photo credit should read LOIC VENANCE/AFP/Getty Images)

Facebook has beaten third-quarter earnings forecasts despite the social media giant facing intense scrutiny from US lawmakers, sending shares up over five per cent in after-hours trading.

Read more: Facebook abandons appeal against £500,000 Cambridge Analytica fine

Profit at the world’s largest social media firm grew 19 per cent to $6.1bn (£4.7bn) in the three months to the end of September year on year, exceeding expectations of $5.5bn. The profit growth pushed earnings per share to $2.12.

Lawmakers in the US and around the world have in recent years turned an increasingly bright spotlight on Facebook due to concerns over privacy and the use of the social media website during elections.

In the US, the Department of Justice, Congress, and dozens of states have opened investigations in the past year into whether Facebook, Amazon and Google have abused their market power to stifle competition.

Facebook’s third-quarter results demonstrate the company’s ability to generate a huge profit even while under heavy scrutiny, however.

Facebook founder and chief executive Mark Zuckerberg said: “We had a good quarter and our community and business continue to grow.”

“We are focused on making progress on major social issues and building new experiences that improve people’s lives around the world.”

Crucially, the company’s advertising revenue rose 28 per cent to $17.4bn in the third quarter compared to a year earlier.

In after-hours trading Facebook’s shares rose 5.2 per cent to $197.99.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “What’s miraculous about Facebook is that where most companies would be bumping up against the sides of the tank, it continues to grow.”

“User numbers continue to swell and advertising revenues are growing even faster,” he said.

“Unfortunately for Facebook, totally dominant market players tend to make regulators nervous – and it’s now firmly in regulators sights on both sides of the Atlantic.”

Read more: Congress drills Mark Zuckerberg over Facebook’s Libra digital currency plans

Yet he said that “unless regulators get tough” it does not look as if Facebook’s profit growth will stop.

(Image credit: Getty)