All those controversies over Facebook’s data and privacy practices, fake news and election meddling have finally hit its bottom line.

Facebook said today that it expects to pay a $3 billion to $5 billion fine to the Federal Trade Commission over its user data practices, and it took a $3 billion charge in its first quarter to cover it. Nonetheless, the social networking giant nonetheless reported better-than-expected first-quarter earnings and revenue.

Facebook said it earned a net profit of 85 cents a share, including that $3 billion charge. Without that charge, profit would have been $5.43 billion, or $1.89 a share. Revenue rose 26%, to $15.08 billion, or 30% to $15.58 billion excluding the impact of foreign exchange rates.

That beat forecasts by Wall Street, which had expected Facebook to report adjusted earnings before that charge of $1.62 on a 25% rise in revenue, to $15 billion.

User growth also saw gains, by 8% for daily active users, which hit 1.56 billion, and by the same amount for monthly active users, which clocked in at 2.38 billion. That was just about spot on Wall Street estimates from Bloomberg. Twitter Inc. and Snap Inc. yesterday both reported user growth that outpaced expectations as well, driving up their shares.

The upshot: Advertisers, let alone most users, don’t seem to care that much –at least not yet — about the seemingly endless missteps and scandals involving privacy, data leaks and manipulation by political players, let alone threats by lawmakers to rein in Facebook’s and other tech companies’ practices.

“Despite the headlines and privacy questions, brands continue to pour their ad dollars into Facebook services in order to reach their audiences at scale,” Yuval Ben-Itzhak, chief executive of social media marketing platform SocialBakers, said in an email.

That said, the fine sets up a danger for Facebook, said eMarketer Principal Analyst Debra Aho Williamson.

“Advertisers should take note of Facebook’s revelation that it set aside $3 billion in the quarter to deal with the FTC investigation of its platform,” she said in an email. “This is a significant development, and any settlement with the FTC may impact the ways advertisers can use the platform in the future.”

Indeed, Facebook itself alluded to the potential for further limits on use of data for targeted advertising, something that now will be a bigger concern for investors. “This is an area to watch closely because if regulation and other factors remove too much data, targeting will suffer” and so will revenue, Ben Schachter, an analyst with Macquarie Capital (USA) Inc. wrote in a note to clients.

Positive drivers

But apparently not yet, and Facebook’s shares jumped nearly 9% in after-hours trading. They’ve risen 36% since the start of the year, far outpacing the S&P 500 index’s 16% gain. Shares closed Tuesday at $183.78 apiece, their highest point since last July, before falling about 0.65% in regular trading today, to $182.58.

“We view all the positive drivers outweighing regulatory overhang and modest engagement headwinds at Core FB,” Cowen & Co. analyst John Blackledge wrote in a recent note to clients in which he maintained his “outperform” rating and a $195 share price target.

In prepared remarks before a 2 p.m. PDT conference call with analysts, CEO Mark Zuckerberg (pictured) alluded to Facebook’s attempts to deal with its various controversies. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet,” he said.

In a memo last month, Zuckerberg wrote that he thinks more privacy-focused platforms will become more important than open social platforms. Although that doesn’t mean the news feed goes away, the CEO plans to meld the messaging services in Messenger, Instagram and WhatsApp to create such a privacy-focused communications platform.

What, me worry?

In comments during the conference call, Zuckerberg sought to downplay the impact of those changes on its business.

“Any impact is going to be longer-term and we don’t know how this will play out,” he said. But he added that using more encryption as planned won’t hurt its business because it won’t change how it uses data. Moreover, he said, reducing permanent of data also won’t mean much because recent data is more useful already.blocked in some areas.

Another concern of some investors is the extent to which private interactions that may provide less useful data for ad targeting could replace more public interactions on Facebook sites. “There needs to be both the digital town square and the digital living room,” he said. “People want to use both public and private platforms.”

Not least, the CEO discussed the prospect of more regulation but again downplayed the long-term impacts. “Any regulation may hurt our business,” he said, but he insisted that the trust regulations may promote in Facebook and other platforms should be positive in the long run.

Talking Stories

One area of focus for investors is the company’s relatively new Stories format on Instagram and Facebook itself, something analysts have noticed. Advertisers haven’t been willing to pay as much for ads on these ephemeral posts as in Facebook’s core news feed, but that may be changing.

Morgan Stanley analyst Brian Nowak recently raised his price target on Facebook on assumed strength in Stories ads. And today, the company said the biggest contributor to ad impression growth in the quarter was the result of Stories. Chief Operating Officer Sheryl Sandberg also said that Stories ads are driving more engagement.

Instagram, which has said it has 500 million Stories users, has been a particular focus for investors because of the photo- and video-sharing site’s outsized growth compared with the rest of Facebook. In the latter part of the first quarter, Facebook rolled out a new feature called Instagram Checkout, which enables people to buy products they see on Instagram from within that app. The feature could add $10 billion to Facebook’s revenue by 2021, according to an estimate from Deutsche Bank.

“While monetization for IG’s checkout feature is unclear, it could be a powerful driver, as IG is a significant product/brand discovery media and coupling it with a seamless checkout could drive strong conversion rates for sellers,” Cowen’s Blackledge wrote in his recent note to clients. “IG continues to be perhaps the best-positioned platform to drive Social Commerce trends in the coming years, in our view.”

The company continues to spend big, as capital investment in data centers, network infrastructure and other facilities rose to nearly $4 billion in the quarter, up from $2.8 billion a year ago. In 2019, said Chief Financial Officer David Wehner, capital spending will be $17 billion to $19 billion. Some specifics of that increased spending will likely be outlined at Facebook’s F8 developer conference next week.

Headcount also jumped 36%, to 37,773 employees.

Photo: Robert Hof/SiliconANGLE