What’s the forecast for Facebook? Cloudy or sunny? Wall Street is sharply divided, and the social network’s stock went on a roller coaster ride Wednesday after quarterly results came in much better than expected. Facebook shares jumped 15 percent after the company reported a 60 percent increase in third-quarter sales versus a loss a year ago.
But the share price tumbled later after remarks during an earnings call with analysts by Facebook’s Chief Financial Officer David Ebersman. He disclosed that the site is no longer the cool hangout spot for some kids. “We did see a decrease in daily users” among younger teens, he said. Many teenagers have been moving away from Facebook to Instagram, Pinterest and other newer social sites. But overall, Facebook is still adding users and has growing revenue from mobile advertising. The company says monthly active users grew to 1.19 billion, from 1.16 billion three months earlier.
The stock market retreated from record highs after the Federal Reserve’s statement revealed no change in money policy. The central bank plans to maintain its $85 billion a month bond buying program. The Fed’s economic outlook was a little better than some expected. The statement spoke of “growing underlying strength in the broader economy,” that may have led to investor caution. The bond buying stimulus is seen as a major factor in this year’s strong performance for stocks. The Dow fell more than 61 points yesterday and the S&P dropped nearly 9 points. Stock futures this morning fell.
This could be good news for the economy. Oil prices are cheaper because of plentiful supplies. The wholesale price of West Texas crude dropped to less than $97 a barrel on global futures markets. US gasoline prices are at their lowest level in three years, which frees up more disposable income for consumers as the holiday shopping season begins.
American Airlines and US Airways may propose giving up some takeoff spots and landing rights at Washington’s Reagan National airport. The airlines want to merge, but the Justice Department and six states sued to block the deal. The case expected to go to trial late next month.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow