Facebook Inc.’s strong fourth quarter results included impressive 44 per cent revenue growth, a roughly 500-basis-point annual operating margin expansion, and a 14 per cent year-over-year improvement in monthly average users to 2.13 billion. But investors are likely more interested in the social media giant’s recently-announced changes to its News Feed.
Specifically, the market wants to know how monetization will be affected, and after a brief sell-off on Wednesday afternoon, investors resumed the recent buying trend on Thursday to send Facebook shares to a fresh high above US$190.
Facebook stated that the impact is not clearly negative, as time spent viewing more posts from friends and family, as opposed to longer articles from publishers, may end up creating more monetization opportunities.
“We feared going in that Facebook would use the News Feed changes as a way to talk down revenue more materially, but management stuck with its tone of continued (steady) deceleration, which we think is a positive,” said Doug Anmuth, an internet analyst at J.P. Morgan.