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What's going on?
Facebooks profit in its latest quarter rose 71% versus a year ago to beat Wall Streets expectations once again and the stock jumped almost 4%!
What does this mean?
This was another strong report card from Facebook. Its revenue increased to over $9 billion, up 45% versus a year ago that is humongous growth for such a large company. One concern is that Facebook is basically already selling all the advertising space on your News Feed that it can, and so that growth may be difficult to sustain. However, it is far from fully monetizing Instagram, WhatsApp or Messenger so there may still be plenty of low hanging fruit left.
Why should I care?
The bigger picture: Facebook is posing an increasing threat to traditional television.
Facebook is trying to turn itself into a video-first company by introducing more video content on its platform which it will then use to sell ad space. Its planning a huge spending spree to bring more captivating content to its platform, creating yet another competitor to traditional television (as if Netflix, Amazon Prime and others didnt pose enough of a problem!).
For markets: The performance of Facebooks stock is nothing short of exceptional.
Facebooks stock is up more than 40% so far this year. While its current growth has propelled some of that, investors are clearly betting on its ability to successfully deliver on its new initiatives, like video content and monetizing its other platforms. There is certainly the risk that it falls short as it tackles those new challenges but investors right now are hopping on for the ride.
Originally posted as part of the Finimize daily email.
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