Facebook Inc. (NASDAQ:FB) was very excited to tout a couple of new revenue opportunities last fall when it began to roll out Promoted Posts and Facebook Gifts. However, in an analysis of the results from the company’s most recent quarterly report, it seems that the hype might have outpaced the actual outcome from the fourth quarter of 2012. In the early going, these new services didn’t add much to the bottom line, which likely didn’t please many of the equity hedge funds that own positions in this stock.
To be fair, these features have only been in place for a couple months – and in the case of Gifts, it was only rolled out to all users in early December, the final month of the fiscal quarter – but at the very least it seemed that Facebook Inc. (NASDAQ:FB) users were not exactly lining up around the block to use these new features, according to some extrapolated research. Facebook didn’t break out its numbers, but instead grouped Promoted Posts and Gifts together when the company reported that its revenue from those two new featured totaled about $5 million (the company’s total revenue surpassed $1 billion for the quarter).
Based on reasonable estimates, it was determined that Promoted Posts – where Facebook Inc. (NASDAQ:FB) charges for a user to get its post seen by all friends and/or the public Facebook community – might have accounted for about 80 percent of the revenue number for PP and Gifts – which means Gifts would have amounted to about $1 million of revenue (or less than 0.1 percent of the total).
Facebook Inc. (NASDAQ:FB) CEO Mark Zuckerberg tried to temper expectations for the services going forward when he said, “While we remain excited about the long-term potential of commerce on Facebook, current revenue from user promoted posts and Gifts is very small, and we expect 2013 contributions from these initiatives to remain very small given current run rates.”
What do you think about Promoted Posts and Gifts? Are you patient enough to give these services a chance to gather revenue for Facebook Inc. (NASDAQ:FB)? Let us know your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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