Facebook once again reported blowout earnings Wednesday afternoon, topping analyst expectations for the 14th consecutive quarter. Its total revenue jumped 56 percent compared with the same period last year, an astronomical rate of growth for one of the five biggest companies in the world by market capitalization.
But on a conference call after the earnings release, Facebook Chief Financial Officer David Wehner warned analysts and investors that the company’s sizzling revenue growth rate is likely to slow down as it comes up against a limit of how many ads it can cram in each user’s news feed.
Wehner told participants on the call that he expects Facebook’s revenue growth to slow “meaningfully,” which sent the stock — already down in after-hours trading — further into the red. Facebook’s shares are down 7 percent from their closing price.
“As we slow ad load growth we’re going to have a slowing in revenue,” Wehner said.
Combined with plans to aggressively increase its level of investment, as Facebook pours resources into video and virtual reality — CEO Mark Zuckerberg said the company is putting an additional $250 million into developing VR content — that could put pressure from both the revenue and expense side, which prompted a strong reaction from Wall Street.
6 Craziest Bets Facebook Is Making for the Next Decade (Photos)
Facebook CEO Mark Zuckerberg unveiled a 10-year road map for the world's biggest social network, including projects in virtual reality and artificial intelligence, at its annual developers' conference F8 in San Francisco.
Facebook
Zuckerberg said he believes virtual reality headsets will be no different than traditional pairs of glasses in 10 years.
Screenshot/Facebook's F8 Live Stream
The company released a reference design for a camera shaped like a U.F.O. that can capture 360-degree video.
Facebook
Facebook Messenger is about to get an army of bots. Chatbots, which are programs powered by artificial intelligence that do simple things, are going to integrate into Facebook's instant messaging system. It makes it easier for companies like CNN to send you personalized stories and other tasks.
Facebook
Facebook is obsessed with live video, and it wants you to be able to stream live from any device -- even a drone. To mark a move opening up the programming to Facebook live streaming, Zuckerberg flew a drone out on stage that filmed everybody in the packed conference hall.
Screenshot/Facebook F8 Live Stream
Zuckerberg kicked off the conference by making a veiled jab at Donald Trump. “I hear fearful voices calling for building walls ... Instead of building walls, we can help build bridges," he said, as he explained that connecting the world is key to Facebook's future. (Maybe Trump won't notice: His preferred social network is Twitter, after all.)
Getty
1 of 6
CEO Mark Zuckerberg believes you’ll watch VR on your regular old Warby Parker glasses in 10 years, see the other big announcements Facebook made at its annual F8 conference
Facebook CEO Mark Zuckerberg unveiled a 10-year road map for the world's biggest social network, including projects in virtual reality and artificial intelligence, at its annual developers' conference F8 in San Francisco.