Facebook reported successful quarterly earnings, but like many large companies, it might have to keep spending to win. After growth companies pass the first phase of a meteoric rise in stock price and popularity, there is a tendency to stall and settle into more mature and gradual growth with muted expectations. CEO Mark Zuckerberg seems to want none of that, but is willing to raise capital expenditures dramatically to fuel growth, something that Facebook seems to be in a position to do.
Advertising revenue, particularly from mobile, was strong, and showed a 49% increase year over year. Mobile now makes up 69% of advertising revenue. Earnings per share increased, but still fell short of Wall Street’s estimates by 8 cents a share. Operating margin fell from 44% to 29%, but management explained that new investments in Atlas, Live Rail and Ad Tech were going to see payoffs in time, according to ValueWalk.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at [email protected].
Thank you.
In fact, some may balk at Facebook’s capital expenditures increase, that rose from 16% to 29% in the fourth quarter, but when one considers much of this was to cover the $22 billion purchase of WhatsApp, this is a sound investment rather than an expense. Mark Zuckerberg needs to figure out how to get those using the social network platform to use it on a daily basis and to squeeze more money out of each user. If he has to break the piggy bank to do it, the piggy bank could be broken by more capable hands.
