Facebook, a giant in the social media world, is facing hard times as its shares fell 2% on Wall Street due to a substantial decline in the revenue growth. A 46% rise in quarterly revenue amounting to $3.5 billion could not help to impress investors resulting in the fall of Facebook share value.
The Sunny Side
There is a 13% rise in the number of Facebook users amounting to 1.44 billion as compared to the previous year. As Mark Zuckerberg launched the site transition to mobile devices, a significant rise of 24% came to be seen in the number of mobile Facebook users. Now, approximately 1.25 billion people access this social networking on their smartphones, which is all time high.
Although the company has spent a big amount on development, it is actually paying off. As a result of making investment in mobile advertising, its advertising revenue has risen by 69%.
Despite all this, the company share fell as profits knocked down to $642 million. This happened due to heavy expenditure made on the development of the Facebook mobile app and recruitment of additional staff. This 83% rise in the fixed cost led to decline in profit.
The company turnover in the first quarter of 2015 exhibits a sustained growth, however, it fails to sustain its profits. The profit sheet of January to March shows that the networking site is already 20% down this year due to major expenses incurred on development issues.
“The trends are all going in the right direction. The cost rise is one thing that can derail this story,” said Macquarie Research analyst Ben Schachter. The company, however, is looking ahead to its lucrative future.