Facebook Shares Are Getting Sacked

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Reuters, Steve Mitchell-USA TODAY Sports

Despite a strong earnings report, Facebook is sliding in pre-market trading.

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The stock is down 7.7% to $74.52 in early morning trading.

Facebook reported that it earned $0.43 per share on $3.2 billion in revenue for the third quarter of the year. That was ahead of analyst expectations for $0.40 per share on $3.12 billion in revenue.

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The stock was fine on the earnings, but started to slide during the company's earnings call.

On the call, new CFO David Wehner delivered two bits of unpleasant news.

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First, he said revenue for Q4 would only be up 40%-47% compared the year prior. At the mid-point, that would be below analyst expectations. It's also a steep deceleration in growth. This quarter, revenue was up 59%, and the quarter before revenue was up 60%.

Next, he said that expenses would increase by 55%-75% next year. The increase in expenses should hit Facebook's profitability, but it's part of Facebook's plan to invest for the future. This shouldn't be a surprise. But, it was a jolt to investors.

On the call, founder and CEO Mark Zuckerberg said he has a 3-year, a 5-year, and a 10-year plan for various business lines at Facebook. To execute on those plans, Facebook will need to invest.