Facebook Status: Big Gains, but Worries Ahead

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Facebook spooked investors with warnings that it may be nearing the limits of one of its most important areas of revenue growth.

After reporting strong third-quarter financial results, Facebook executives told analysts that they may not be able to cram any more ads into users' news feeds, and that US teens are spending less time on the site. Chief Financial Officer David Ebersman said Facebook doesn't expect to "significantly increase" the share of ads in a user's news feed from what it is now. The inclusion of ads into those feeds, last year, helped propel a big increase in Facebook revenue. Instead, Facebook will rely on improving the quality and relevance of the ads to drive up prices, he said. Ebersman also said the number of US teens using Facebook daily declined from the previous quarter. He called the decline "of questionable statistical significance" and said it is hard to measure the number of teen users on the network because their self-reported ages are unreliable. Those worrisome signs overshadowed a better-than-expected earnings report that showed the company swinging to a profit on a 60% jump in revenue, topping $2 billion for the first time.


Facebook Status: Big Gains, but Worries Ahead Mobile Ads Fuel a Jump in Profit at Facebook (NYTimes)