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Mark Zuckerberg Promises That Some of Facebook's Biggest Bets Won't Pay Off for a Long Time

And Wall Street seems just fine with that.

Adam Tow
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Facebook had a giant Q2, which looked like many of its previous quarters: Revenue and profits were both way up, driven by a boom in mobile ads.

But once Wall Street had digested those numbers, Mark Zuckerberg and his team wanted to make sure that investors didn’t get used to them, at least on the profits side.

On the company’s earnings call, they took great pains to indicate that they were in the process of making very big bets on stuff that won’t pay off for a very long time, like Oculus Rift, the virtual reality company it just bought for $2 billion, and WhatsApp, the messaging startup it plans to buy for $19 billion.

Facebook could reduce some of the risk with a “cheap and easy approach,” Zuckerberg said — jamming ads into new apps, or shoving payment opportunities into them. “But we’re not going to do that.”

Investors seem okay with that. Facebook shares, which were trading up about four percent when the call started, moved up as the afternoon progressed. They’re now up about five percent.


A quick look at Facebook’s Q2: Revenue of $2.91 billion and earnings of 42 cents a share. Wall Street had expected at least $2.81 billion and 32 cents, but this isn’t enough to impress investors — the stock is basically flat after hours. Update: Now traders seem a bit more interested, and have pushed shares up a couple percent.

If you’ve seen Facebook’s earnings reports over the past few quarters, then the highlights will seem familiar: Facebook is still growing its usage numbers, and its mobile ad business — which was literally nonexistent when it IPO’d a couple years ago — is now giant and accounts for 62 percent of the company’s ad revenue.

Usage numbers, straight from the press release:

  • Daily active users were 829 million on average for June 2014, an increase of 19 percent year-over-year.
  • Mobile DAUs were 654 million on average for June 2014, an increase of 39 percent year-over-year.
  • Monthly active users were 1.32 billion as of June 30, 2014, an increase of 14 percent year-over-year.
  • Mobile MAUs were 1.07 billion as of June 30, 2014, an increase of 31 percent year-over-year.

There is not much more to chew over here, so we’ll duck out temporarily until the earnings call, which we’ll cover live at 5 pm ET.

Until then, here’s one of several up-and-to-the-right charts from FB investor relations. This one explains how much users are worth to Facebook, depending on where they live:

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