Facebook Reports Slowest Quarter in Two Years, Stocks Fall by 2%
With the countless new (and amazing) projects that Facebook is bringing in every second day, one can assume that sky is the limit for them when it comes to growth, expansion and earnings.
However, the financial reports presented by the social media giant, coupled with the performance of their stocks this Wednesday, present a dent in their growth as well as stock value.
According to Reuters, the last quarter was the slowest in terms of growth that Facebook has reported in the past two years!
Also, if you check out the stock markets you will also see that the after-market trading of their shares resulted in a two percent dip in the market price of their stocks.
However, don’t be alarmed as things are almost working according to the plans. At the start of the year they had revealed plans of massive investments aimed at expansion as well as introduction of new products – and we have been seeing the fruits of those plans already.
So as a result, the operating expenses of the company rose considerably (83 percent to be exact); a major chunk of this is the R&D costs they are bearing which have risen by a massive 133 percent.
As Macquarie Research analyst Ben Schachter puts it, things are going great now but it is a matter of sustenance at such high costs:
It’s a generally solid quarter. The trends are all going in the right direction. The cost rise is one thing that can derail this story. The question is, can they keep costs under control and what will be the new revenue streams around video, Instagram and virtual reality around Oculus?
On the upside, Facebook users have increased by 14 percent as compared to last year. Now there are 1.44 billion users!