One of the biggest social media network companies that boast of having maximum number of registered users is Facebook. It has become so huge that very few companies are in a position to compete with it. At the same time, it is equally difficult to keep pace with the same rate that took place when the business was much smaller. It is regarded as ‘law associated with large numbers’. However, very few signs are shown by Facebook about hitting any growth limit as of yet.
Will it soon experience slow down?
Several Wall Street analysts are said to follow very keenly the rise of this giant social network from its inception. They have been for quite some time warning about slowdown faced by this company for some time. This is a perception which Facebook has itself accepted, which is slowdown in its advertising revenue growth rate. It is these fears which actually have managed to push down its stock price after its latest result posting this month.
However, investors are found to be satisfied with their Facebook earnings date and this company beat revenue and earnings estimate in the recent quarter. It also simultaneously managed to enhance its user base. After hours trading saw its share going upwards.
Its growth in revenue
Rather than profit of $1.31/share expected by Wall Street, Facebook reported $1.41. Moreover, its total revenue that is the majority associated with advertising came around $8.8 billion for quarter when compared to consensus estimation of around $8.5 billion. It only represented further growth enjoyed by this company by over 50% in last year’s same quarter.
Its revenue for the entire year, rode to about $10 million or approximately 54% to $27.5 billion, with the firm’s net income being doubled to around $10 billion. Few concerns that investors had with regards to the growth of Facebook were put to ease by these numbers. One of the most suggested fears was of the company hitting ad-revenue peak that could probably have been overblown. Even the management officials of the company had given out warnings of it getting quite close to its maximum ad percentage or ‘ad load’ in average user’s newsfeed. However, significant growth was noticed, which is considered to be a good sign of favorable road is indeed for investors.
How it managed to do was by simply by increasing its pie size. It had manage to add over 265 million new active monthly users during 2016, and currently has over 1.8 billion users logging every month as well as over 1.2 billion users logging every day.
The other significant reason for its growth is the mobile which was a favorable growth engine. Daily users accounting to 1 billion+ were found to access the social network site using their tablets or smartphones. This number only grew by around 23% during the last quarter. The firm’s total ad revenue from mobile came to around 84%.
Even the news of Facebook losing copyright infringement lawsuit of $500 million caused no worries to investors.