Facebook shares plunge on 2015 spending news
Company announces massive investment in recent acquisitions, spooks Wall Street
Facebook Inc shares dropped 9% yesterday following news that the social media giant would need to increase spending in 2015.
Facebook's stock value has increased by around 47% in 2014 on the back of strong growth in its mobile advertising revenue. As a result investors did not punish the company for costly acquisitions such as WhatsApp and Oculus and shares reached a historic high before its Q3 2014 financials were released.
CFO Dave Wehner warned analysts that the firm would shoulder a 55% to 75% surge in spending, investing inn products that had yet to become profitable. Much of that investment is thought to be earmarked for WhatsApp and Oculus.
The fact that Facebook has been more tight-lipped on 2015 revenue prospects has led to concern among analysts and investors.
"Giving expense guidance without giving revenue guidance is frustrating and spooking [Wall Street]," said BTIG analyst Richard Greenfield.
Facebook CEO Mark Zuckerberg has tried to calm the market, saying he is less interested in growing revenue from the acquired products as he is in growing their user bases.
"For us products don't get that interesting until they have about a billion people using them," he said.