Facebook Inc shares tumbled 7 percent in after-hours trading on Wednesday as the world's largest online social media network warned that revenue growth would slow this quarter, offsetting strong earnings that handily beat Wall Street estimates.
The slip reflected doubts among investors that the company can continue its runaway success, even as it reported strong mobile ad numbers and steady growth in its enormous network, which ticked up to nearly 1.8 billion monthly users in the latest quarter.
Facebook reported a greater-than-expected 56 percent rise in quarterly revenue, to $7.01 billion, showing the company is claiming an ever-growing share of the online advertising pie.
Slow Growth?
Google's parent Alphabet Inc last week also announced strong revenue and profit growth, while traditional media companies like the New York Times Co are struggling to stem ad revenue declines.
However, in a call with analysts, Facebook Chief Financial Officer David Wehner said ad growth would likely slow “meaningfully” due to limits on “ad load,” or the number of ads that Facebook can put in front of customers without alienating them.
Mobile Booming
Even as ad loads topped out, Wehner said Facebook had opportunities to grow revenue by boosting time spent on the site, further growing its user base and tapping still-rising advertiser demand.
Mobile ads accounted for 84 percent of Facebook’s total advertising revenue of $6.82 billion in the third quarter that ended 30 September, compared with 78 percent a year earlier. The company said it surpassed one billion mobile-only monthly users last quarter.
The company is also reaping the benefits of a big push into video, both on Facebook itself and on the Instagram photo app.
Facebook reported quarterly revenue of $7.01 billion, beating analysts' average estimate of $6.92 billion, according to Thomson Reuters I/B/E/S.
Facebook said about 1.79 billion people were using the service monthly as of 30 September, up 16 percent, or 243 million, from a year earlier. By comparison, the 10-year-old Twitter Inc last week reported it had 317 million monthly users in total.
New Revenue Streams
The strong numbers come as Facebook has struggled in recent months to combat allegations that it unfairly removes certain content on its service, and news in September that the company had for years overestimated how it calculates the average time users spend watching video.
But Facebook still has numerous avenues for developing new revenue streams. Its WhatsApp messaging app, with more than a billion users, currently generates little revenue, as do newer products such as the Oculus Rift virtual reality headset.
(This article has been published in arrangement with Reuters and has been cut for length.)
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