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Facebook results will be telling for its future

By Tom Hudson, Miami Herald
Published: July 24, 2017, 6:05am

The future for Facebook will arrive when it reports its second-quarter financial results on Wednesday. A year ago, the social media giant gently began to warn shareholders not to expect its monster revenue growth to continue. In the language of Wall Street, sales growth would be decelerating.

Why? Because Facebook has reached peak ad load, or is close to it. Ad load is the euphemistic phrase the company uses to describe its practice of jamming advertising into users’ news feeds. More ads equals more sales for Facebook, translating into big revenue growth that has pushed the stock up 40 percent over the past year.

The slower growth it’s seeing now is far from no growth, though. After all, in this most recent quarter, the 2 billionth active monthly user joined the network, further cementing its position as the leading global social media platform. By the way, Facebook’s portfolio also includes the world’s second- and third-largest social network apps: Facebook Messenger and WhatsApp.

The company’s revenue growth has room to fall, if it must. A year ago, total advertising payments and other fees jumped 59 percent from a year earlier. That sets up a tough comparison for the quarterly results due out Wednesday.

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