The company reported GAAP earnings of $1.04 per share, beating street estimates by a big margin of 18 cents. Wehner said Facebook is embarking on a “significant ramp up” with capital expenditures in the range of $7 billion to $7.5 billion, up 50% from past year.
The figures indicate that a quarter of the world’s population now uses Facebook every month, with most of the new users coming from outside of Europe and North America. But Facebook’s plans to stop increasing the number of ads shown to users in their news feeds in mid-2017 has concerned investors, who are eager to hear how the company will make up for the slowdown in revenue growth.
Did Facebook let advertisers target teens with low self-esteem?
– Asia-Pacific ad revenue grew at 60% while rest-of-the-world ad revenue grew 66%. Facebook is growing at an incredible pace, the question is can it continue to grow at its current pace? Despite a 12% increase in capital investments in Q1 2017 over the same period in 2016, Facebook’s free cash flows increased 61% y-o-y in the quarter to $3.8 billion.
Facebook beat consensus revenue estimates on user growth and strength in worldwide revenue, but its transition to GAAP obfuscates its EPS beat.
Free cash flow rose to $3.8 billion during the quarter. Messenger now has 1.2 billion users.
Next quarter, Facebook is expected to reach the milestone of 2 billion monthly active users after adding 80 million in the first quarter for a total of 1.94 billion.
Despite the huge user base, Facebook is still underserved in key markets such as China and developing nations with limited or no internet access. Snapchat itself has around 161 million daily users as of February.
Will Facebook Growth Slowdown Anytime Soon?
Also, ever since its availability to worldwide advertisers previous year, Instagram’s ad platform emerged as an important cash cow for Facebook. Even though Facebook continued to warn of a deceleration in ad load, analysts were nearly euphoric about Facebook’s growth prospects, pointing to a successful transition to video and revenue possibilities with Instagram. “We don’t know how much ad load has driven growth”.
The social media juggernaut is expected to generate $31.94bn in mobile ad revenue globally in 2017, up 42.1 per cent from a year earlier, according to the research firm eMarketer.
“We’ve seen people hurting themselves and others on Facebook – either live or in video posted later”, Zuckerberg said. “There’s a lot to do here”, Zuckerberg said.
Perhaps investors got spooked by the company’s announcement earlier in the day that would hire 3,000 people to expedite the removal of uploaded videos of murder and suicide. More than 100 million people on Facebook are members of “very meaningful” groups, like parent support groups or illness support groups that are an important part of their lives, ‘ Zuckerberg said.
Facebook’s work with Instagram is seen as proof that it can replicate its main network’s success in advertising on other properties. That’s right – they think these 10 stocks are even better buys. The Motley Fool has a disclosure policy.