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Despite a Strong Q4, Facebook’s Revenue Continues to Slow

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Facebook’s fourth-quarter numbers

Social media giant Facebook (FB) delivered revenue of ~$16.91 billion in the fourth quarter, beating expectations by 3.2%. Facebook also delivered double-digit revenue growth of 30% YoY (year-over-year) in the quarter.

Facebook’s average revenue per user of $7.37 exceeded analysts’ estimates in the period. It was also 21% higher than in the third quarter and 19% higher than in the fourth quarter of 2017.

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Facebook’s sluggish growth in revenue

Facebook has been posting slow growth in its revenue, as the company is finding it difficult to grow its user base. Its revenue growth rate has been slowing for the past three consecutive quarters. Facebook’s revenue growth was 49% in the first quarter, 42% in the second quarter, 33% in the third quarter, and 30% in the fourth quarter.

The company continues to expect the same trend in the first quarter of 2019 and the second half of 2019, as it’s been heavily investing in lower ad rates in its Stories product, which is a Snapchat-inspired (SNAP) sharing option for disappearing photos and videos. The Stories format is popular on Instagram and WhatsApp and is gaining traction on the Facebook platform.

Advertising revenue has been helping Facebook grow its revenue amid concerns over its data privacy policies. Facebook’s ad revenue, which contributes more than 98% to its revenue, rose 30% YoY to $16.6 billion in the fourth quarter. Its rivals Twitter (TWTR), Snap, Yelp (YELP), and Alphabet’s (GOOGL) Google also look to advertising sales for the majority of their revenues.

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