The fall of a giant

Facebook's Q4 2019 earnings make the future look bleak

Revenue is up, but shareholder spirits are down.


On Wednesday, Facebook released its numbers for the end of 2019 and the year as a whole. At first glance, the numbers are good: a 25 percent increase in year-over-year revenue for the fourth quarter. Unfortunately, that’s the slowest growth the company’s ever reported. Facebook is hitting a wall with market penetration as its services dominate in most of the internet-connected world.

Unable to answer basic questions on the earnings call about long-promised features like Instagram Checkout, Facebook leadership doesn’t seem to have any innovative leaps in the near future. Facing more criticism than ever and finally reckoning with some serious competition, the only way to go is down.

More of the same — Advertising is still Facebook’s cash cow. Of 2019’s nearly $71 billion in revenue, 98.5 percent came from advertising. Clearly, Zuckerberg’s not willing to let that go, stating in the call that Facebook would keep its free, ad-supported model. Bloomberg reporter Sarah Frier noted in a tweet thread that he also plans to keep allowing targeted ads, pushing for encrypted messages across the platforms, and letting users associate with whomever they please — no matter how likely they are to commit a hate crime.

Questions from analysts about Instagram Checkout, the company’s foray into social commerce, and the longstanding question of how or when WhatsApp will be monetized went unanswered. Following this bleak outlook, shares fell approximately 7 percent in extended trading.

Is there any hope? — By all accounts, Facebook is scratching around in the dark. Without new users to entice, advertising revenue alone can’t sustain continued growth. Aware of these limitations, Facebook’s seemingly benevolent plans to build a cable ring around Africa would easily bring a wealth of potential new users through the company’s doors.

Instagram Checkout could breathe some new life into the company coffers (assuming it takes a cut of transactions), but we still don’t know when it will launch. The social commerce feature along with Facebook Marketplace could benefit from the computer vision tech behind somewhat newly acquired GrokStyle. No one’s heard much from that team since the February 2019 acquisition, however, and Google Shopping is starting to cramp their style.

The cryptocurrency Libra is drudging along, now with the help of the Chainspace blockchain team. Unsurprisingly, people are wary about Facebook having a hand in their finances. Other lackluster endeavors include Facebook Dating and the meager attempt at a TikTok killer, Lasso.

One of the few Facebook properties that still brings people joy, Oculus, along with other gaming ventures, may have the best chance of keeping the company relevant. Oculus continues to trail behind Sony in the still fairly niche VR industry, but the recent PlayGiga acquisition puts Facebook into the cloud gaming race in a more significant way.

For the most part, the efforts show the company trying to play catch-up instead of leading a charge. With lawsuits and probes coming in from multiple sides, it’s easy for a massive company like Facebook to lose whatever small sense of creativity it had left. These new numbers suggest that for the foreseeable future, tried and true will have to suffice.