Facebook Inc (NASDAQ: FB) seems to be on an altogether different trajectory from the rest of the high profile tech pack. At least it is what, one can deduce from its superlative revenue performance. Despite the many challenges, Facebook mustered revenue growth of 50 times its rival social networking platform Twitter Inc (NYSE: TWTR) in the fourth quarter of 2016.
Facebook was founded in 2004 and became a public company in 2012.
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Facebook’s Books Reveal Ruddy Revenue Growth
Year Revenues (in million)
- 2007 $153
- 2008 $272 (78 percent)
- 2009 $777 (186 percent)
- 2010 $1,974 (154 percent)
- 2011 $3,711 (88 percent)
- 2012 $5,089 (37 percent)
- 2013 $7,872 (55 percent)
- 2014 $12,466 (58 percent)
- 2015 $17,928 (44 percent)
- 2016 $27,638 (54 percent)
Facebook Vs. Big Tech Peers
A comparison of its recent quarterly top-line performance with the likes of Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Paypal Holdings Inc (NASDAQ: PYPL), Intel Corporation (NASDAQ: INTC), Apple Inc. (NASDAQ: AAPL), eBay Inc (NASDAQ: EBAY), Microsoft Corporation (NASDAQ: MSFT) and Twitter reveals Facebook’s outperformance.
You will find more statistics at Statista
Facebook grew its top line by 50.8 percent in the fourth quarter of 2016 compared to 22.4 percent for Amazon, which took the second position in terms of revenue growth. Google’s parent Alphabet was a close third, with 22.2 percent revenue growth.
Paypal, which was spun off from eBay, saw revenue growth of 16.6 percent. Chip giant Intel could grow its revenues merely 3.3 percent. For all the hype around Apple, its revenues rose only 3.1 percent in the fourth quarter of 2016. Microsoft’s revenue growth was anemic at 1.2 percent. Twitter reported revenue growth of 0.9 percent.
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Maturity Blues, Competitive Pressure
Some of the old tech names such as Microsoft, Intel and Apple are operating in the mature phase of the industry growth cycle, past the emerging phase and the growth phase. When businesses mature, earnings and revenues slow down substantially.
Meanwhile, others such as eBay, Amazon and Twitter have succumbed to competitive pressure, which has squeezed their revenue growth potential. Twitter, in particular, hasn’t been able to substantially increase its monthly active users numbers. The stagnation has set the tongues wagging about a potential sale, although a recent stake build by its founder Jack Dorsey has put to rest the speculation at least for now.
Facebook And Its Torrid Revenue Growth
Solid growth in ad revenues is one of the reasons for the company’s scintillating top line performance. On its third-quarter 2016 earnings call, chief financial officer David Wehner said ad revenue growth averaged 50 percent over the past two years, which was in line with the overall revenue growth in the said period.
However, things might be slowing down. Wehner revealed that the company is close to maxing out the number of ads it can cram into newsfeeds without damaging user experience. Consequently, the company may be constrained to increase the ad load at the same rate going forward. It remains to be seen if Facebook’s revenue growth drops off to levels comparable to other big cap tech stocks.
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