The Massachusetts, US-based Facebook Inc. (NASDAQ:FB) has issued a warning saying that the growth of their revenues from advertisements may slow down in the next few months. David Wehner, the Chief Financial Officer, said that there must be a limit on how many ads can be shown on the timeline of people. It has to be “meaningful” otherwise, Facebook will end up alienating users.
Analysts are saying that the business will be forced to find out new ways to make money if they are planning to show fewer advertisements in 2017. Josh Olson, who works as an analyst with Edward Jones, says the business may end up charging advertisers more. However, it remains to be seen whether this drives away many advertisers, as many small businesses too put up their ads on the social media platform.
Wehner also revealed that they are going to make aggressive investments in 2017, which means the expenses are going to rise.
The stock market went dizzy after this announcement. The Facebook (NASDAQ:FB) stock came down heavily by 7.05 percent in after-hours trading on Wednesday.
Performance Better Than Expected
Earnings of this social media giant remain impressive, though. Facebook reported a profit of $2.4 billion for the July-September quarter, which is an impressive 166 percent more than the same period of last year. This is 56 percent more than what the market expected. Analysts had predicted that the revenue is likely to be around $6.92 billion.
This is the sixth straight time the business has managed to beat the expectations of analysts. Commenting on the performance, Mark Zuckerberg said that is has been “another good quarter”.
Close to 1.1 billion now have their accounts on Facebook, and the number is increasing every day. Just a year back, it was just 894 million. It was also revealed that as much as 84 percent of their advertising revenues are coming from mobile. In the last quarter, Facebook’s revenue from mobile was 78 percent. More than a billion people visiting the site just from their mobile devices. Time spent on the site has also gone up significantly.
Facebook also revealed that its push into video, on both Instagram and Facebook itself, is working very well. Mark Zuckerberg has already stated that they have integrated a video-first strategy for the entire platform.
Google (NASDAQ:GOOGL) reported last week strong revenue as well as revenue growth. Traditional media businesses, such as The New York Times, on the other hand, continue to suffer because of declining advertising revenues.