Facebook reported good second quarter earnings for 2014, throwing cold water on Federal Reserve Chairman Janet Yellen’s claim of a “social-networking bubble.”
Revenue totaled $2.91 billion, a 61 percent increase from the 2013 second quarter. Facebook also saw a 19 percent increase year-over-year in daily active users (DAUs), and a 39 percent increase year-over-year in mobile DAUs, according to Facebook’s statement.
CEO and founder Mark Zuckerberg said this quarter was one of Facebook’s best.
“It’s been a quarter with good performance,” Zuckerberg said in a conference call. “We are very encouraged by the reactions from developers. We are excited by the opportunities ahead. This has been a strong period for us, we’ve reached new milestones in the business.”
Chief Operating Officer Sheryl Sandberg said going forward, Facebook plans to capitalize on its mobile advertising platform, since more and more users are using their smartphones to access Facebook, rather than their desktops.
“In all of this we remain focused on the transition to mobile,” Sandberg said. “[We want to] improve the relevance of ads people see on and off Facebook. We’re the first platform to deliver personal marketing upscale.”
Facebook’s revenue is mainly driven by ads, and since users see less ads on a mobile device than on a desktop, Chief Financial Officer Dave Wehner said this will create challenges for Facebook in the future as it makes the adjustment.
“Mobile continues to be a strong driver of our growth,” Wehner said. “We are seeing a decline in people using desktop Facebook, which will create a challenge in generating revenue going forward.”
Facebook’s success may mean Yellen is wrong about the social-networking bubble. In her annual testimony before Congress, Yellen said the equity valuations (or the total value of a company) for social media firms “do appear substantially stretched.” According to MarketWatch, social media firms constitute a “microbubble,” and even if the social media industry collapsed, there are not enough funds in the industry to bring down the economy the way the 2008 housing crisis did. Nonetheless, Facebook’s performance in the mobile advertising industry will be closely watched.
At the market close, Facebook’s stock was up almost 3 percent.
