There is a simple reason why Facebook's third quarter is worth a second investor look: efficiency. For the third three-month period in a row, the social media giant's net profit margins have increased. That is, for nearly a year now, after all those boring expenses were paid out, more pennies were left over from every dollar sold.
As refreshingly optimistic as this performance is, investors are still dealing with the Web. Problems still loom. Namely that, despite this enormous operational upside, Facebook itself did not actually grow. Total balance sheet assets were not only flat, but fell slightly, from $15.1 billion to $14.9 billion year-over-year. Where are the assets leaking? For starters, not all of Facebook's users are real. Up to roughly 10% of all accounts are either doubled or from non-human, automated sources, according to the disclosures. And if you look, growth in North America is leveling out; global revenues grew 30% more than those in the U.S. and Canada. But the most troubling chapter in Facebook is far darker. Even though the company is young, the young want less and less to do with it. "As we've said previously, this is a hard issue for us to measure because self-reported age data is unreliable for young users," David Ebersman, chief financial officer, said during the company's conference call last week. But while overall average daily users jumped 25% in September year over year, Ebersman said, overall U.S. teen use was flat to down. "We do see a decrease in daily users, specifically among younger teens," he admitted. An uncertainty that Rosenstein confirms: "From what I am seeing there is a lot of success in pricing right now," he said. "But could it get more competitive and price the smaller firms out? Sure." "This is all still a work in progress."