What's going on?

Facebook reported another quarter of astounding growth: revenue increased more than 50% versus a year ago. That�s a huge figure for a company of this size, but its stock sold off 6% on Thursday� what gives?

What does this mean?

The increase of advertising on your news feed has been the main driver behind Facebook�s massive revenue growth over the past two years. But, starting next year, it�s going stop increasing the amount of ads that you see in your news feed. That might be nice for you, but it will put a lid on the company�s revenue growth – and this has investors a little worried. Facebook will shift its strategy to video in the hopes of increasing users� engagement time and creating a new revenue stream (e.g. focusing on Facebook Live and putting ads in the videos).

Why should I care?

For the stock: Zuckerberg has already successfully reinvented this company once � but there�s no guarantee he can do it again.
Facebook used to be a desktop-based experience. In 2012, Zuckerberg famously ordered his engineers to focus almost exclusively on mobile � and it became the 5th most valuable public company in the world, largely on the back of mobile advertising. Can he do it again with video? There are competitors (ahem� Snapchat) and monetizing video could prove more difficult than the news feed (which you tend to scroll down, not just watch). The 6% stock selloff on Thursday is indicative of some investor nervousness.


The bigger picture: Facebook is another threat to traditional television.
The increasing popularity of ad-free streaming services such as Netflix and Amazon Prime has been well documented and clearly poses a risk to traditional television. Now Facebook, a company that has very detailed personal data on its almost 2 billion monthly active users, is setting its sights on video. It looks like selling ads on traditional TV isn�t going to get any easier for �old media.�