Ever since Facebook’s meteoric rise, pundits and experts have been waiting for the other shoe to drop for the company when it comes to revenue. Many thought that it would come sooner, but the company developed ingenious ways to create ad revenue. Experts predicted even that revenue would start to slow, but it has remained strong in the face of stiff competition in the social media market.
Despite experts, and the company itself, warning that the ad revenue is sure the plateau in the coming year, the earning reported have remained steadfast. The revenue stream didn’t increase to the same degree that it did during some of the company’s biggest growth periods, but it still far outperformed estimates.
Part of this has to be the acquisition of Instagram. Companies are still coming to both platforms in droves as a means to advertise their businesses of all sizes, though. This stands to reason. Mobile advertising is still the largest growing sector of the industry and these are two of the most recognizable brands in that sector. Facebook’s CEO, David Wehner, says that new companies are coming to both social media platforms on a daily basis in order to take their brand to the next level or get it off the ground. This trend has not waned and it doesn’t look like it will anytime in the near future.
The numbers don’t lie. Facebook reported over $9 billion in revenue in the most recent financial quarter. This is staggering in itself and is almost a 50% increase over the same quarter last year. Included in this revenue is $3.9 billion in profits which is a 71% increase over the same time last year. So, not only is Facebook increasing their revenue on a regular basis, the company is also finding ways to streamline its logistics and increase profits at the same time, a great sign for investors in the company.
While the company’s revenue was $9.3 billion, Wall Street predicted the revenue for that quarter would be a little lower than that at $9.2 billion. The share price ended up at $1.32 a share. This represents the biggest gap between expectations and reality as Wall Street experts predicted that the share price would be 20 cents lower at the end of that fiscal quarter.
It is amazing that Facebook is experiencing such growth since the company has such a big share of the population visiting the site on a regular basis. About 20% of the world’s population has a profile on the site. Wehner says the only issue facing the company when it comes to further increasing ad revenue is the growing problem of ad load and not allowing people’s timeline’s to be overrun by ads, driving them away from the site.
Article Sources: https://www.nytimes.com/2017/07/26/technology/facebook-users-profit.html
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