The world’s largest online social network is looking for new advertising features to supplement the major revenue streams that it expects to cool this year.
Facebook reported quarterly earnings and fourth quarter earnings, thanks to the help of the fast growing mobile advertising company. However, its stock fell from a record high in after-hours trading as investors worried about future earnings.
The world’s largest online social network, approaching its five-year initial public offering, is looking for new ad formats to supplement the main revenue streams it hopes will cool down in the coming months. this year.
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Facebook shares fell 2.4% in after-hours trading to $ 148.12. They closed at an all-time high of $ 153.60 on Tuesday.
The company’s chief financial officer, David Wehner, said in a press conference after announcing that the company’s revenue forecasts for advertising revenue growth are expected to fall significantly over 2017, Repeat the company’s previous warning that it has reached the limit of “ad load”, or the number of ads it can squeeze into the pages of the user before making them uncomfortable.
Wehner issued similar alerts on ad loading in November and February, although the recession was not done.
New products, such as mid-roll ads or appearing on Facebook’s Messenger app, could spur growth, but Wehner and its chief executive, Mark Zuckerberg, said the plan Still in the early stages.
At the same time, the company said the cost will continue to be high, rising 40% to 50% this year compared to 2016 and reducing future profits.
“When we look back in 2017, there are some initiatives that we think are valuable to the community and to the company in the long term,” Wehner said. Our operating leverage “.
Josh Olson, an analyst with Edward Jones, said Facebook spending contributed to the fall in share prices after hours.
Investors have been hoping for some signs that we will see some relief as the year progresses, and we are still able to .. I think the guiding scope of spending, unchanged, has Probably what’s weighing on the stock, “Olson said.
Facebook reported quarterly profits for the first three months of 2017 increased 76.6% from the same period last year to $ 3.06 billion and total revenue increased 49% to $ 8.03 billion.
According to research firm eMarketer, the company expects to earn $ 31.94 billion in worldwide mobile advertising revenue by 2017, up 42.1% from the previous year.
Facebook will account for 22.6% of the global mobile advertising market, with Google’s competitors, Alphabet, expected to become the market leader. Share of 35.1%.
Facebook continues to race toward the 2 billion-user threshold, saying that about 1.94 billion people use their services monthly on March 31. That’s a 17% increase from a year ago.
According to financial data and analyst firm FactSet, average analysts have predicted a monthly active user population of $ 1.91 billion.
Facebook’s net income increased to $ 3.06 billion, or $ 1.04 per share, in the first quarter from $ 1.73 billion, or 60 cents per share, a year. before.
Mobile advertising accounted for 85% of the company’s total ad revenue of $ 7.86 billion in the first quarter ended March 31, compared with 82% a year earlier.
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According to FactSet, average analysts expect total advertising revenue of $ 7.6 billion.
Earlier, Zuckerberg said the company would add 3,000 more next year to track and remove images of homicides, suicides and other inappropriate material from their networks, which has become It is a threat to Facebook’s public image.
By: Anna Lee