Facebook’s growth is slowing, adding pressure to a company facing more restrictive privacy regulations and continued scrutiny from global lawmakers and antitrust officials.
The world's biggest social-media company reported record fourth-quarter revenue of $21.1 billion (€19.18 billion), boosted by ads on Instagram and in video.
The 25 per cent increase from the period a year earlier was the slowest-ever quarterly sales growth for the company, though it topped analysts’ average estimate of $20.9 billion.
Facebook said it had 2.89 billion users of its products around the world, but the growth on the main social network – the primary source of advertising sales – has started to slow. Shares fell in extended trading on the news.
Facebook has warned for several quarters that growing at the same rate will be more difficult in the future. The company's trajectory is limited by the number of world internet users, most of whom already have an account on Facebook or its WhatsApp, Instagram and Messenger properties. That means finding future revenue streams will be increasingly difficult, requiring experimentation with avenues that might not pay off, such as in artificial intelligence, virtual reality and shopping.
What Facebook “has to grapple with is a rising cost framework while each incremental dollar of revenue growth gets tougher,” said James Cakmak, a partner at Clockwise Capital. Expenses rose 34 per cent to $12.2 billion during 2019, the California-based company said on Wednesday in a statement.
The uncertainty comes as Facebook has fewer public cheerleaders. The company has been vilified by US presidential candidates, while facing new global privacy laws and two federal antitrust probes.
Chief executive Mark Zuckerberg has testified multiple times about his company's stumbles in front of the US Congress.
Nonetheless, Facebook and Google dominated digital advertising spending with an estimated 61 per cent of the market in 2019, a slight increase from a year earlier, even as Amazon gains sales, researcher EMarketer said in November.
Facebook’s main social network had 2.5 billion monthly active users as of the end of 2019, slightly topping analysts’ estimate of 2.49 billion.
Shares declined about 7 per cent in extended trading after closing on Wednesday at a record high of $223.23 in New York.
The company reported profit of $2.56 per share, beating the $2.53 per share analyst estimate. – Bloomberg