Revenues At Facebook Better Than Expected But Subscriber Growth Is Slowing

Friday, July 27, 2012 06:58
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Revenues At Facebook Better Than Expected But Subscriber Growth Is Slowing

Tags: earnings | investing | markets

Facebook met estimates in its first earnings report since becoming a public company but growth in the number of users is slowing and investors seemed to be unimpressed with the company’s plans to go mobile.

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Revenue growth was a bit better than anticipated, up 32%. The main challenge for the company is to keep users visiting the site so its advertisers will benefit. This is particularly challenging on mobile devices where there too many ads could dampen user experience.
 
User growth was the primary measure before the company went public. Now, the focus is on monetizing those users to make the company profitable. The second quarter saw a loss of 8 cents per share. Both the number of users and the time users spend on the site are new criteria for growth since Facebook makes its money primarily through advertising.
 
Facebook is actively trying to utilize all the information its users put on their pages, even to the point of turning a user’s like of a certain brand into a personal endorsement of that brand or product.
 
Analysts say Facebook is such a different type of company that it’s difficult to measure growth. One could take either side and say Facebook may fail as many of the dot com companies did back in the late 90s. Or Facebook could become the current-day Amazon with a business model no one really understands but ultimately being the most successful survivor.

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