Payments to shareholders, including Chief Executive Mark Zuckerberg, have been cited as the reason for $157m (100m) losses reported in the first results announced by Facebook since becoming a public company in May of this year.
Second quarter costs and expenses increased by 295% to $1.93bn. But excluding the shareholder payments, the social networking giant would have actually reported profits of $295m. This would have been an improvement against the same period one year previous in which Facebook announced profits of $240m.
Shares in Facebook fell 11% in after hours trading in New York, plunging to $23.94; a record low since the company was taken public. In May after the Facebook IPO shares in Facebook were available for $38 each.
The social network is currently struggling to resolve the way it generates profits as more and more users access the mobile version of the site rather than the desktop version. As it becomes more difficult to generate advertising revenue, the company is making less money from each individual Facebook user. As a result its operating profit margin fell to 43% in the period compared with 53% a year earlier.
But managing director of Menlo Ventures, and Facebook Shareholder, Shervin Pishevar maintains that he is not concerned about the company’s share price.
"I don't think there's any kind of predictions you can make in the short term. We take a very long term view [and] all of the numbers are incredibly exciting," he said.
Pishevar also described the increase in mobile usage as an interesting, and not worrying, development.
"It's driving a lot of growth for Facebook in terms of where people are spending their time and their money."