Despite achieving 47% growth from the prior year and earning $5.11 Billion on $13.2 Billion in revenue, investors of Facebook are concerned given some of the recent trends being seen in the quarterly results. These trends were confirmed by management as they spoke with investors on the earnings call. Facebook had to deal with the following challenges during the quarter:
- GDPR, the European data and privacy regulation went live
- Participated in US congress hearing regarding the data usage and privacy issues disclosed in Q1 2018
- Headcount jumped 47% to deal with continued privacy, data, and content (fake news) issues
- Daily Active Users was 1.47 billion in June which was slightly below estimates
- US user base was unchanged while Europe decreased given the above issues experienced
These headwinds are challenging management as they maneuver after being accustomed to high growth that would offset any challenges presented. They now expect the send half of the year to be challenging as the CFO has stated that they expect Quarter over Quarter revenue to actually decrease “high-single digit percentages.” After closing the regular trading session at a record high of $217.50, their stock price quickly plummeted by up to 24% at the lows which represents a record $151 billion of market capitalization. Today, the stock closed at $176.26 down almost 19% for its worst day ever and the worst lost in market cap in the history of stock exchanges. The stock had recovered all ground loss in Q1 after the issues did not appear in the previous quarter’s results. As investors expected continued positive results, they have been shocked which is why price reacted so strongly.
Despite the negative news, I continue to see Facebook as the benchmark of a successful deployment of a social media platform that can be used by others, like #Steemit, to compare metrics to in order to monitor adoption and growth. We have seen how their large user base has monetized the platform to achieve impressive revenue figures. Given the margin on the revenue, the underlying income is also strong although now being challenged given the amount of workforce increases needed to support some of the challenges they are seeing. Although they did not associated the deceleration of user growth to these issues, they may also have to think about marketing to capture continued user growth as they have been trying to do by deploying ads.
Another note that I saw is that mobile continues to drive the growth as now 91% of revenues is via mobile versus 87% a year earlier. It is amazing how dependent the revenues are of mobile platforms. I have always thought that the mobile improvements and the quick adoption of smartphones was a key growth driver in the past to achieve the user base seen today. This is one of the thoughts I think #STEEM and the apps built on it could really use to accelerate adoption and growth. Providing a user interface that could facilitate interaction with the blockchain would generate a more accelerated adoption as users in the social media space are already accustomed in using mobile interfaces to consume and create content. The quarter continues to demonstrate the potential of the #STEEM blockchain and its ecosystem.
What are your thoughts on this quarter from Facebook? Has the #deletefacebook movement picked up the #STEEM needed to impact their metrics? How can #STEEM leverage this and potentially attract users to the blockchain for the social media content creation and consumption? I look forward to hearing your thoughts in the comments below!
Source: https://www.bloomberg.com/news/articles/2018-07-25/facebook-revenue-user-growth-miss-estimates-as-scandals-pile-up
https://www.bloomberg.com/news/articles/2018-07-26/how-facebook-s-151-billion-rout-could-rewrite-the-history-books
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