Facebook fewer users with less revenue

His latest earnings report it was a complete disaster. After many months with bad media news, Facebook revealed its profits second quarter in July and reported less revenue than Wall Street analysts had estimated.

Facebook

The most important thing announced by were the least users. In fact, Facebook users did not grow at all in its most valuable markets, the US, Canada and Europe, but instead the number shrank.

After years of uninterrupted user input (Facebook has more than 2,2 billion users worldwide and has three more services with more than one billion users), the company hit a wall.

Was it just a bad quarter? or is Facebook itself and bad management? We will learn the afternoon of Tuesday when the company reports Q3's profits.

The entry of new users will be what we should look first. Facebook may be shrinking in some markets, but the number of users continues to grow globally. Despite the fact that in the last quarter the Facebook inventory has fallen more than 20% since its latest profit announcement and has not recovered yet, the company had 22 millions of new daily users (in the last quarter).

Not many on Facebook, but there are still 22 million people. So yes, Facebook is still technically growing. The but it's that all of these new Facebook users came from markets where the company doesn't make money, or doesn't make that much money.

Every Facebook user in the US or in Canada generated about $ 26 in revenue for the company in the last quarter. Each Asia-Pacific user generated just $ 2,62. In other parts of the world, such as South America or Africa, users generated just $ 1,91.

So if Facebook enters less users than usual and these users come from non-revenue-generating areas or give less revenue per user to the company, investors will start worrying.

On Tuesday, Facebook executives will have an opportunity to explain why this is happening, but also what their plan to do to correct it.

The good news is that Facebook has more revenue than basic social network revenues. Instagram has more than one billion users, and some estimate that this year it will make $ 8 billion dollars.

Facebook's Messenger service has 1.4 billion users and started selling ads while the company owned by Facebook, with 1.5 billion users, has virtually no revenue.

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Written by giorgos

George still wonders what he's doing here ...

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