Facebook, Inc. FB delivered a blowout fourth-quarter earnings report this week that sent the stock soaring. But while Facebook is clearly doing plenty of things right, there are a couple of trends that could be troubling for Facebook investors in the long term.
Facebook added 1 million North American users in Q4 and 4 million European users. Those 5 million new users accounted for only 17 percent of Facebook’s total user growth. Facebook investors were likely pleased with the platform’s 16 million new users in the Asia-Pacific region and 8 million additional new users from elsewhere in the world, but the Statista chart below highlights how not all user growth is created equal when it comes to Facebook’s financials.
Facebook generated an average revenue per user of $34.86 from North American users and $10.98 from European users in the fourth quarter. That unit revenue drops to just $2.96 for Asian users and $2.11 for users in the rest of the world.
In other words, Facebook generated a combined $78.74 million in new revenue from its 5 million new users in North America and Europe. The 24 million new users in the rest of the world generated just $64.24 million in revenue.
TD Ameritrade Chief Market Strategist JJ Kinahan said the slowing DAU growth is a concern, and he'd still go into Faceboook with a note of caution, but the overall story is it was an amazing quarter.
"My true takeaway was this was a blowout on so many levels," Kinahan told Benzinga. "How many reports have you read that have been positive about Facebook the last six months? All we’ve heard is people coming off the platform. Yes, I am concerned, but the story here is still a ‘We showed you that we weren’t lying’ story."
Facebook is piling on the new international users, but that doesn’t simply mean the social media giant and its investors can ignore its core markets in Europe and the U.S. Twitter, Inc. TWTR and Snap, Inc. SNAP have each dealt with user growth dipping into negative territory in recent quarters. If Facebook starts losing North American subscribers at some point, it will have to add nearly 12 million Asian subscribers just to offset the revenue impact of losing 1 million U.S. subscribers.
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