Facebook, Inc. (NASDAQ:FB) Wednesday reported quarterly revenue and earnings that easily topped analysts’ estimate, but stock was still down as the company said that growth will slow ‘meaningfully’ next year. Facebook’s chief financial officer David Wehner said ad load, one of three main factors of Facebook’s growth, could “come down meaningfully” after mid-2017. “We expect revenue growth rates will decline as we lap strong quarters,” Wehner said in a conference call with investors.
Facebook shares dropped nearly 5 percent to $120.97 in the early trading because of the caution about advertising growth. The social media giant still posted better-than-expected earnings and revenue for the third quarter.
Quarterly earnings tripled to $2.38 billion from $896 million a year earlier. Excluding certain items, adjusted earnings were $1.09 per share, compared with 57 cents per share a year earlier. Analysts from Wall Street had projected a profit of 97 cents. Revenue jumped 56 percent to $7.01 billion in the third quarter, beating analysts’ estimates of $6.9 billion. Facebook sales grew at more than 50 percent for the past four quarters. Advertising revenue rose to $6.82 billion, topping analysts’ estimates of $6.71 billion.
“Fundamentally, the mobile networks are getting to a point where a margin of people around the world can have the experience of watching a video,” Zuckerberg said. “If you go back a few years and you tried to load a video in Newsfeed, it might have to buffer for 30 seconds before you watched it, which wasn’t a good enough experience for that to be the primary way that people shared….it’s just much more intensive technically. There aren’t very many companies that can do this at the scale that we’re talking about. That’s an advantage for us.”