Facebook shares soar as results beat expectations as number of users grows to 1.65 billion

Mark Zuckerberg announces proposal to create new class of nonvoting stock to retain the major control of his company

The social network on Wednesday reported earnings of $1.51 billion (£1bn) up from $512 million in the same period last year (Getty Images)

Facebook has beaten expectations for its first quarter pushed by its robust mobile advertising business and a growing number of users.

The social network on Wednesday reported earnings of $1.51 billion (£1bn) up from $512 million in the same period a year earlier. Facebook’s user rank grew to 1.65 billion from 1.44 billion in the first quarter last year.

The stronger than expected results drove the company’s shares to 9.5 per cent in after-hours trading to $118.39 setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago.

This comes a day after Apple and Twitter have both disappointed investors with Apple shares falling 7 per cent on Wednesday.

Facebook (FB) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Daniel Morgan, senior portfolio manager at Synovus Trust Company which owns $40 million of Facebook shares said it was “by far the best number” he had seen in technology.

Sales for the quarter reached $5.3 billion up from $3.5 billion last year. Mobile ad revenue accounted for about 82 per cent of total ad revenue compared with about 73 per cent a year earlier.

Mark Zuckerberg, Facebook’s CEO, said users now spend more than 50 minutes a day across its suite of app, excluding WhatsApp.

Zuckerberg seized the opportunity to propose a new class nonvoting stock to make sure that he retains the major control of his company. The new class of C shares would have the same economic rights as other shares but wouldn’t have voting rights.

This means that Facebook will be allowed to distribute them to employees and acquisitions without diluting Zuckerberg’s control of the company.

Shareholders are scheduled to vote on the proposal at the company’s annual meeting on June 20.

Investors said they were not concerned that Zuckerberg would have increasing control because of the company consistent ability to grow and exceed expectations.

“I honestly don’t think that anyone cares if he has more power, since he’s done everything right since they went public,” said Michael Patcher, Wedbush Securities analyst.

Facebook’s founder has pledge to give away 99 per cent of his Facebook shares away in his lifetime in December, with the value of his remaining 1 per cent expected to grow.

(Additonal reporting by Reuters)