Facebook Stock Drops Further After Hours as CFO Expects Revenue Slowdown

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.

Also Read: Facebook Soars Past Q3 Earnings Expectations But Stock Drops After Hours

“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.