By CCN.com: Facebook’s stock ran up 7.5% in after-hours trading to $196 after Q1 earnings painted a seemingly rosy growth picture. Revenue exploded by $3.1 billion to $15.08 billion, which exceeded estimates. Facebook CEO Mark Zuckerberg, however, revealed that the FTC’s investigation into the company for privacy problems will be painful on the expense line, saying:

“In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion.”

The FTC is probing how Facebook shared data with outside vendors, and the agency is considering the highest fine in history against the company. It’s about time. Facebook has been notoriously lax in protecting user privacy.

Advertisers Still Buy Into the Hype

Amazingly, these issues do not appear to have spooked advertisers, given the soaring 26% increase in ad revenue. Facebook’s stock had been languishing in the $170 range for some time.

Facebook now up nearly 6% after hours and at its highest level since its big gap down last July…$FB pic.twitter.com/rxjzi0DNIe — CNBC's Fast Money (@CNBCFastMoney) April 24, 2019

Facebook also reported some astonishing metrics in terms of usage, which is helping to push Facebook’s stock higher. The metrics suggest that Facebook somehow mollifies enraged users with honeyed words that “we’ll get better at protecting you.” That’s nonsense, Zuckerberg knows it, and the FTC should slam Facebook with an even bigger fine.

Daily active users increased 8% year-over-year to 1.56 billion on average for March 2019. Monthly active users increased by 8% to 2.38 billion.

Meanwhile, 93% of all ad revenue now comes from mobile. Facebook’s stock is buttressed by a balance sheet with $45 billion in cash and no long-term debt — and that’s why the FTC should slam Facebook for a much bigger fine.

Toxic Questions Abound

Facebook claims that 2.7 billion people use its library of apps – Facebook, Instagram, WhatsApp, and Messenger. These massive numbers seem impossible.

The entire world’s population is 7.5 billion. China, which does not permit Facebook, has 1.4 billion people. More than 2 billion people are under the age of 13 and likely don’t use Facebook. Advertisers thus believe that more than half the remaining population uses Facebook, and that seems impossible.

With previous revelations that Yelp and Twitter found millions of fake accounts, there seems little question that Facebook is afflicted with the same issue. So how long before advertisers realize that all their money was being spent on non-existent eyeballs?

Another question plaguing Facebook’s stock is the issue of censorship. James O’Keefe’s Project Veritas caught Twitter employees on hidden cameras talking about “shadowbanning” and exposing their open hostility towards conservatives. Facebook has been no stranger to similar allegations. O’Keefe placed an undercover reporter inside Facebook who later revealed that Facebook discriminated against conservatives using de-boosting traffic software.

In 2016, former employees admitted to suppressing conservative stories on newsfeeds.

Senate Republicans have been saber-rattling against big tech, including Facebook, suggesting that the Department of Justice should open inquiries into these operations.

Blissful Investors Ignore the Bad News

The litany of challenging news does not appear to have harmed Facebook’s stock. While it has been languishing, FB has risen more than 50% off its December lows. FB has tripled over the past five years, and the company carries a $474 billion valuation, net of cash. Facebook routinely generates more than $15 billion in annual free cash flow. That seems likely to continue until the other shoes drop.