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Facebook shares dive as revenue growth set to slow

Thursday, November 3, 2016 4:37
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Shares in Facebook, Inc (NASDAQ:FB) slipped by more than 6% in pre-market trading as the social media giant revealed that its rapid growth looks set to slow in the coming year.

After beating expectations for 14 consecutive quarters, the group – which counts Instagram and Whatsapp amongst its ‘family’ – said revenue growth rates would “come down meaningfully” in the coming months.

The California-based firm said there was a limit to how many ads – its main source of revenue – it can put on the platform, and that that limit would likely be reached in the middle of 2017.

“As we slow ad growth, we’re going to have a slowing on revenues as well,” said chief financial officer David Wehner.

The warning came after Facebook posted profits of US$2.4bn (£1.9bn) for the three months to September, a staggering 166% increase from the same period a year earlier.

More than 95% of the company’s revenues for the period came from advertising.

Founder Mark Zuckerberg hailed the three months as “another good quarter”, with more than 1bn people now logging onto the site or app each day. 

Shares were down almost 7% in pre-market trading to US$120.28. 

Story by ProactiveInvestors


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