Facebook Inc warned on Tuesday of a dramatic upsurge in spending in 2015 and projected a slowdown in revenue growth this quarter, slicing a tenth off its market value.
The hefty spending plans exposed the first signs of stress in the rock-solid support that investors have accorded the social media company in the last year.
With Facebook’s mobile advertising business delivering repeated quarters of breakneck revenue growth, the business has faced little pushback from investors on pricey, multi-billion dollar acquisitions such as for example WhatsApp and Oculus. Shares of Facebook reached an all-time most of $81.16 on Tuesday, prior to the company reported its third-quarter results.
Chief Financial Officer Dave Wehner told analysts on a conference call that the social networking is finding your way through a 55 percent to 75 percent spike in expenses next year, when the world’s largest social networking intends to purchase Whatsapp, Oculus and other products which have yet showing a profit.
That is clearly a big change from the business’s current spending patterns, with costs and expenses in the first nine months of 2013 up a comparatively modest 32 percent. Facebook declined to supply any estimates because of its expected pace of revenue growth in 2015, increasing investor worries.
"Giving expense guidance without giving revenue guidance is frustrating and spooking THE ROAD," said BTIG analyst Richard Greenfield.
"The multi-billion dollar question is what’s revenue growth likely to appear to be next year," he said.
Wehner forecast revenue growth of 40 percent to 47 percent in the ultimate quarter of 2014. That’s down sharply from 59 percent in the 3rd quarter.
The financial forecasts came on a single day as Facebook revealed vast sums of dollars in losses from WhatsApp.
Facebook LEADER Mark Zuckerberg has told Wall Street he’s in no hurry to extract a payoff from the assortment of acquired products, stressing the need for growing the amount of users first.
"For all of us products don’t get that interesting until they have in regards to a billion people with them," Zuckerberg said.
Shares of Facebook, up roughly 47 percent this season, slid nearly 9 percent to $73.80 in extended trading on Tuesday.
Facebook reported a better-than-expected 59 percent jump in third-quarter revenue and a good gain in its user base that’s already the world’s largest social media community. The business is known as a pioneer in mobile advertising, outshining rivals like Twitter Inc, which are struggling to sustain user engagement and growth.
Google Inc, the world’s No.1 Google search, has seen its advertising rates stuck in a multi-year decline since it adapts its lucrative advertising business for the smartphones that consumers increasingly favor.
Mobile ads represented two-thirds of Facebook’s advertising revenue in the 3rd quarter, and the business said that the common price of its ads a lot more than tripled year-on-year.
"They continue steadily to show that there surely is a whole lot of demand for his or her product, both with regards to users attempting to spend time there and advertisers attempting to spend cash," said Ben Schachter an analyst with Macquarie Research.
Facebook’s final number of monthly users reached 1.35 billion in the 3rd quarter, with 64 percent of its users accessing the service each day.
Facebook said revenue in the 90 days ended Sept. 30 totaled $3.2 billion, up 59 percent from $2.02 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for revenue of $3.12 billion normally.
Net gain risen to $806 million, or 30 cents a share in the 3rd quarter, in comparison to $425 million, or 17 cents a share in the year-ago period. Excluding certain items, Facebook said it earned 43 cents a share.
Facebook also for the very first time disclosed the financial performance for WhatsApp, a mobile messaging app that the business acquired earlier this month for $22 billion.
According to a filing with the Securities and Exchange Commission on Tuesday, WhatsApp lost $232.5 million in the first half a year of 2014, in comparison to a lack of $58.8 million in the first half a year of 2013.
(Editing by Bernard Orr)