NEW YORK (TheStreet) --Shares of Facebook (FB) are falling on Thursday morning as the stock continues a selloff started in after-hours trading on Wednesday following the release of the company's third quarter financial results. The company is expecting a slowdown in revenue growth rates in 2017.
Facebook's ad load metric, the number of ads on the site, a key driver of its revenue growth will play a "less significant" role in the company's mid-2017 revenue growth, CFO Dave Wehner said on the conference call yesterday.
Fox Business Network's Stuart Varney said this morning on his show "Varney and Co." that he wants to see if the selloff will last.
"What is the big problem with Facebook that has taken it down so much?" Varney asked FBN's Elizabeth MacDonald.
"A tepid forecast and also the business model about selling ads everywhere, including on WhatsApp and maybe Oculus Rift," MacDonald said. "Do you want to see an ad for cheese doodles and beer in your Oculus Rift? Or in your WhatsApp instant messaging? I think that might be irritating to users."
The "big problem" is that Facebook "can't maintain their growth rate in the future," Varney added.
"That's exactly right," FBN's Ashley Webster noted. "That's the saturation point on ads and to E-Mack's point, when they become annoying, where do you go to get your revenue?"
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Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate FACEBOOK INC as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
You can view the full analysis from the report here: FB