Shares in Facebook have fallen due to higher costs. Shares fell by 2% in after-hours trading after the company posted slower-than-expected revenue growth. Research and development costs have been eating into the company’s profits.
Facebook reported profits of $512 million for Q1, a year-on-year fall of 20%. Revenue rose by 42%, which was lower than analysts had predicted. The firm also announced a 13% rise in monthly active users. Mobile phone users went up 24% to 1.25 billion. Facebook has been working hard to attract younger people using smartphones and has been trying to transform its growing level of mobile use into advertising revenue. It says that mobile sales ads accounted for three-quarters of total ad sales in Q1, with Mark Zuckerberg calling it a “strong start to the year”.
Investors have been expressing concern about revenue growth as well as the rising costs being paid out by Facebook. The social giant has committed to R&D in an attempt to evolve and become more versatile. It spent $566 million on R&D, a huge leap from the $181 million it invested a year earlier. It says that R&D costs are likely to increase as it makes further acquisitions. The company recently reacted angrily to claims about its approach to privacy.