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Facebook Inc. (FB) Focus Should Shift to Monetizing WhatsApp

Facebook Inc. (NASDAQ:FB) is offsetting its woes on struggling to attract new users by essentially generating more revenue from its current users, seen a by a 69% growth in mobile revenue. During an interview on CNBC, Sizemore Capital Management CIO, Charles Sizemore, said Facebook’s focus should shift into unlocking value in WhatsApp having spent a good chunk of its cash balance in acquiring the messaging startup.

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Facebook Inc. (NASDAQ:FB) strategy, of pursuing users as they move into mobile, seems to be paying up as the company continues to top the charts on mobile advertising revenue.

A 3% growth in active users in the last quarter was the lowest ever recorded by Facebook Inc. (NASDAQ:FB) since 2012. Chief operating officer Sheryl Sandberg now reiterates that focus shifts into generating value from video advertising as well as marketing.

“With every passing quarter, Facebook gets a bigger percentage of its revenue from Mobile. Look at the results for this quarter; they beat estimates by a wide margin, revenues were up by almost half that shows me that it is working,” said Mr. Sizemore.

Operating costs continue to be a point of concern having jumped by 87% in the fourth quarter to $2.7 billion. Facebook maintains that increased costs were as a result of increased investments as well as development of infrastructures for the expansion of the company’s video offerings.

It awaits to be seen according to Sizemore how Facebook Inc. (NASDAQ:FB) plans to offset a further decline in monthly active users. Instagram growth story, on the other hand, continues to offer investors something to smile about having already surpassed Twitter Inc. (NYSE:TWTR) on monthly active users.

 Sizemore expects Wall Street to maintain a keen interest on Facebook if the giant social network can clearly show how it intends to unlock value from WhatsApp in terms of returns.

“If investors are going to stay interested in Facebook as a stock, they need to see some guidance there and right now Facebook Inc.(NASDAQ:FB) is not really monetizing its other assets. Facebook spent a lot of money on WhatsApp. They spent about 10% of their market cap buying WhatsApp and today they haven’t really shown what they intend to do with that or how they intend to make the money from it,” said Mr. Sizemore.

Sizemore also believes it will be extremely hard for Facebook to monetize WhatsApp because of its interface when compared to Instagram whose platform can easily handle ads. Users could be scared away to other platforms should Facebook Inc. (NASDAQ:FB) resort to posting ads on the WhatsApp a challenge that shows how hard it will be to monetize the messaging platform according to Sizemore.

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