Investors snubbed Facebook despite rising sales and profits at the social media giant, as soaring costs took the shine off growth in advertising.
Facebook’s shares fell by more than 2% in after hours trading on the New York exchange as first-quarter revenue rose 42% to $3.5 billion (£2.3 billion). That was just below expectations and its slowest quarterly growth for two years.
Profits for the three months to the end of March fell from $639 million in 2014 to $509 million, as costs soared by 83% to $2.61 billion.
Facebook’s acquisitions of WhatsApp, Instagram and Oculus Rift are partly to blame for the steep increase in costs and the company had warned that expenses would climb as it pumps money into expanding the string of newly acquired businesses.
The social network now has 1.44 billion users, 13% more than a year ago, and mobile advertising represents approximately 73% of advertising income.
Research and development costs climbed to $566 million from $181 million the previous year.
Mark Zuckerberg, Facebook’s founder and chief executive, called it “a strong start to the year”.
