Facebook Puts Away Childish Things

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What's going on?

Facebook announced a mixed set of financial results late on Wednesday amid signs that growth is slowing and investors are fretting over the business implications of its efforts to be good for peoples well-being but by most measures, it was still another killer quarter.

What does this mean?

Revenue grew 47% from a year earlier and user numbers were up 14% (not bad when youve got billions already). But Facebook is battling the law of large numbers: it just cant grow as quickly as it used to. And investors have got a little too used to their expectations being smashed something thats tricky to keep on repeating.

Why should I care?

For markets: Facebooks new engagement strategy is a risk for its investors.

Muddying the waters is Facebooks new focus on encouraging meaningful connections between its users (giving your exs wedding photos a perfunctory thumbs-up) as opposed to the passive consumption of content (anyone not seen that heartwarming video about the blind raccoon?). The risk is that the former just isnt as absorbing especially with time wasted spent on Facebook already falling by roughly 50 million hours every day (tweet this). But while viral videos may come and go, Facebook is gambling on its core strength seeing it through: the networks (in theory) unique ability to connect us, digitally, to those we care about.


The bigger picture: Facebook is becoming a mature company which comes with different challenges.

As Facebooks growth slows further, itll likely come under increased pressure to limit its expenses as a way of protecting its profits. Itll be tough to manage that transition while still investing for growth (in Oculus virtual reality, for example), keeping investors sweet and fending off potential new competitors in the fickle consumer tech space. Like many of its earliest users, Facebook is becoming a real adult and itd be surprising if its transition didnt involve at least the odd moment of yearning for its salad days.

Originally posted as part of the Finimize daily email.

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