1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Nicholas Kitonyi
Nicholas Kitonyi
Articles (297)  | Author's Website |

Why Facebook Video Will Drive Growth

Recent product launches could trigger synergies in video streaming services

Shares of the social media giant Facebook Inc. (NASDAQ:FB) have failed to recover following the second quarter 2018’s disappointing results. The company’s stock sharply dropped more than 20% between July 25 to July 30, this year and have continued to trend downwards since.

Currently, Facebook’s stock is trading at a new 18-month low of about $145 per share and judging by the market sentiment directed towards the social networking company, it could sink further to potentially test the current two-year low of about $115 before things begin to get better.


It’s times like this when investors should sit back a bit and re-analyze the company’s business outlook and growth drivers that are not maxed out. The company has been dealing with one of its greatest disasters since its formation following the Cambridge Analytica debacle.

While the news came out at the tail-end of the first quarter of 2018, it looks like the impact was well felt in the second quarter results. And as it prepares to announce third quarter results on Aug. 30, investors will be watching closely to gauge how deep the Cambridge Analytica data breach reports might have affected the company’s digital advertising revenue.

Such news events can humble even the biggest of brands, and Facebook certainly, hasn’t been any different. However, the company’s business model is still one of the most disruptive in the market, as advertisers continue to capitalize on the benefits of its massive user-base.

Among the social networking giant’s most promising business units is Facebook Video, which the company seeks to use to drive future growth. Facebook’s video streaming feature which was tweaked in December 2015 to introduce live video has been one of the success stories of the company’s video streaming services. Reports already indicate that more people now watch Facebook videos than they do on Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube videos. Experts attribute this shift in roles to the socialized model of the social media giant.

In a report published last month, Facebook now averages more than 8 billion video views per day, which is double the numbers reported last year. These are some of the figures that are likely to get more advertisers excited, which in turn will boost Facebook’s video ad revenue. On the other hand, Statista predicts that Facebook’s video ad revenue in the U.S. will cross $9 billion by the year 2021. Video marketing is crucial to every business that looks to capitalize on the power of social media and this will continue to push businesses to increase their budgets on online video ads, which will work in favor of Facebook, YouTube, Twitter Inc. (NYSE:TWTR) and Snap Inc. (NYSE:SNAP), among others.

And Facebook, being the king of social media, is likely to benefit the most, especially given the recent expansion of its video services. In August 2018, Facebook launched Facebook Watch globally, just over a year after launching in the U.S. Facebook Watch is a video streaming service akin to YouTube where video content creators will split advertising revenue with the social media company 55% (creators) to 45% (Facebook). This is the same sharing ratio Alphabet’s YouTube uses for its content creators.

YouTube monetizes video by including a pre-roll video ad at the beginning of a video stream, which has a minimum of five seconds watch period before the viewer can dismiss them. Facebook, on the other hand, has opted to include such ads in the middle of the video stream, at least after the first five minutes, which analysts have compared to mainstream video advertising channels that usually take a commercial break for advertiser content. Some say this model will resonate well with users.

And this month, Facebook launched video chat devices, which will go on sale in the U.S. in November at a price of $199 for the small version and $349 for the large version. According to the promotional material released via social media channels, Portal, as the device has been branded, will be able to automatically zoom in on users and follow them as they move. It will also be able to hand off calls to and from smartphones and tablets.

One potential upside for Facebook Portal could be pegged on the users’ ability to commercialize the technology. With the social media giant launching Facebook watch globally two months ago, many people will be looking to create premium video content and make money through the ad revenue sharing program.

Facebook portals could be used hassle-free to create such videos at home while at the same time broadcasting or recording to later share on social media. Therefore, soon, Facebook live video, Facebook watch and Portals could begin to yield the company synergies that will help drive video-related revenue.

In summary, with Amazon.com Inc. (NASDAQ:AMZN) having launched an ad-network (Amazon Ad Services) of its own that is already threatening to take on Alphabet’s Google and Apple Inc. (NASDAQ:AAPL) also getting in to gain a share of the market by launching a search engine, perhaps it is about time that the social media giant began to leverage its massive user base to grow revenue in other business units.

Therefore, even given Facebook’s recent woes regarding the data breach and disappointing second-quarter results, the company’s massive decline in stock price could be presenting a good opportunity to buy.

Disclosure: I have no position in the stocks mentioned in this article.

About the author:

Nicholas Kitonyi
Nicholas is the founder of CAGR Value. He is a financial analyst with extensive experience in investment research and stock market analysis. His analysis has been featured on several research sites.

Nicholas has solid knowledge of both U.S. and European markets. His investment style is focused on undervalued plays and growth stocks. Nicholas classifies himself as a swing trader and likes to trade GBP/USD, gold and FTSE 100, among other liquid instruments.

Visit Nicholas Kitonyi's Website

Rating: 0.0/5 (0 votes)


Anusinga - 1 year ago    Report SPAM

Hello friends...The Facebook’s video streaming feature which was tweaked in December 2015 to introduce live video has been one of the success stories of the company’s video streaming services.

If you have any issue regarding epson error code 0x97 they take help from error solution site

Annysmith020 - 9 months ago    Report SPAM

If you have faced the issue on your Windows device, then don’t worry. There are several steps that you can follow in order to solve it. Windows comes with its built-in Network Diagnostic tool that will help you to recognize the error and solve it accordingly. So, if your DNS server isn’t responding, then try running the diagnostic tool and check if the issue still exists. In order to do so, you can follow the steps as mentioned in the section below.

ThomasMGonzalez - 9 months ago    Report SPAM

In case you still face this issue or any other problem with your Netgear N300 Setup, you can call professional technicians at WiFiExtAssist to help you around.

Printershelp - 8 months ago    Report SPAM

Get Online Printer Troubleshooting +1-888-441-1595. We have the ability in giving broad help and fix for various sorts and brands of Printers.

Printershelp - 7 months ago    Report SPAM

We are available 24×7 for our customers. We give Brother Printer Support Service of all the models that is labeling printer, embroidery printer and print and scan print. So what are you worrying about contact to us now to get your problem

Robertsmith.2781960 - 7 months ago    Report SPAM

Geek Squad provides help to fix all your broken devices whether electrical or digital. We deal in fixing devices like PC, laptop, television, refrigerator and other appliances. Our team at Geek Squad Tech Support is at your service 24/7 with relevant solutions.

Robertsmith.2781960 - 7 months ago    Report SPAM

Thanks for the information on facebook video function. To get the best tech help contact geek squad support team.

Emmaroyin - 6 months ago    Report SPAM

We've heard that the iPhone XI Max will have a 5.8-inch display, just like the iPhone XS, but with smaller bezels, and that it won't support 5G

GeorgeMartin1408 - 5 months ago    Report SPAM

I really owe to you, keep writing such staff which helps readers to evaluate themselves, Thankyou.
If you face any issue regarding Email Error then click this link... https://www.contactemailssupport.com/blog/how-to-fix-aol-error-code-691/
And also you can call us on our Toll - Free USA +1-8886337151 UK :+44-808-164-5280

John.brown2547 - 5 months ago    Report SPAM

Hi there,

Thank for this awesome blog with great content, which I found very useful. Your blog will be very beneficial for everyone. I have bookmarked your website. Please keep your effort continuous and keep providing us your valuable information and suggestions.

Also, visit blog posted by John Brown. Dial+18886337151 (Toll-Free) for the USA, and Dial +448081645280 for the UK.

<a href="https://www.hptechnicalsupportphonenumber.com/blog/fix-hp-notebook-error-code-162">Visit Now hptechnicalsupportphonenumber</a>

Talyormia - 5 months ago    Report SPAM

You have posted a fantastic blog! This is the best blog, most concise step by step guide. For any issue regarding canon printer visit our blog Toshiba scan file error

Call us: Toll-Free :
USA: +1-888-633-7151 UK: +44-808-164-5280

Sophiawinfield04 - 5 months ago    Report SPAM

Hello, it is a great post. It's been such a wonderful experience while reading your blog. If facing any problem related to a printer please visit Acer laptop keyboard not working and call us on toll-free no. USA: +1-888-633-7151; UK: +44-808-164-5280 for any technical support assistance.

Archers064 - 4 months ago    Report SPAM

Thanks for providing the information with this post. Post is very nice! By the way, I want to share with you information about the best.we are providing epson printer repairing services if you are face any problem you can visit our site. <a href="https://www.epsonprintersupport247.com/fix-epson-printer-error-code-031008/">epson printer error code 031008</a> and more information dial toll free UK: +44-808-164-5280 and USA: +1-888-633-7151

Katew8161 - 4 months ago    Report SPAM

You have posted nice information! If facing any problem related to printer call us on toll-free no. USA: +1-888-633-7151; UK: +44-808-164-5280 for any technical support assistance and please visit List of 101 Brother Printer Errors Code

GeorgeMartin1408 - 4 months ago    Report SPAM

If you face any issue regarding Aol Error then click this link...https://www.contactemailssupport.com/blog/how-to-fix-aol-http-error-504/ And also you can call us on our Toll-free No. +1-888-633-7151

GeorgeMartin1408 - 4 months ago    Report SPAM

If you face any issue regarding Aol Error then click this -AOL http error 504 And also you can call us on our Toll-free No. +1-888-633-7151

JessicaDavies - 3 months ago    Report SPAM

To make an impact with video ads on Facebook, you need to target the. captioning, which, according to Instapage, can increase viewership. contact us. Printer Support Number

GeorgeMartin1408 - 3 months ago    Report SPAM

I found your article interesting, would love to follow your other posts in future.If you face any issue regarding.If you face any issue regarding Error then click this link...https://www.contactemailssupport.com/blog/fix-yahoo-error-code-1032/
And also you can call us on our Toll-free No. +1-888-633-7151

GeorgeMartin1408 - 3 months ago    Report SPAM

Ultimate Blog keep writing more.If you face any issue regarding.If you face any issue regarding Error then click this link-https://www.contactemailssupport.com/blog/how-to-fix-aol-error-code-691/
And also you can call us on our Toll-free No. +1-888-633-7151

Nortonsetup2019 - 2 months ago    Report SPAM

Thank you so much for sharing such a superb information's with us. Your website is very cool. we are impressed by the details that you have on your site.we Bookmarked this website. keep it up and again thanks

office.com/setup | norton.com/setup | norton.com/setup | norton.com/setup

JohnnyHendrix - 2 months ago    Report SPAM

Your videos need to drive engagement. If people . there are plenty of ways for you to increase the engagement rates of your Facebook videos. To get the best tech help contact Geek Squad Support Number team.

Ameliazoeusa - 1 month ago    Report SPAM

Get the instant solution for all technical issues which face by you Yeah! Because Now Geek Squad Services 24x7 customers care always available for you. Only Dial Geek Squad customer Service Number (+1) 855-554-9777. And Our Geek Squad Team helps you As soon as possible.

Stellacarlsonusa - 1 month ago    Report SPAM

24*7 Apple Technical Support is leading Apple support website where you get services provider of Apple remote tech support the USA for third party products and services. Contact Apple Customer Service number +1-855-516-8225.

Graniteastrum - 1 month ago    Report SPAM

A great deal of visitors or customer who is looking for natural stones such as Granite Kitchen Worktops Countertops in London.

Call Now on (+44)203-290-8427

Astrum Granite

Contacttorachel - 1 month ago    Report SPAM

There are many online resources for preparing for the exam. top quality and price for Exam:100% Guarantee to Pass Your ccna exam cram 200-125 and find your Cisco Certification.

ccna exam cram pdf
ccna routing and switching 200-125 exam cram pdf
ccna exam cram 200-125

Please leave your comment:

Performances of the stocks mentioned by Nicholas Kitonyi

User Generated Screeners

pascal.van.garsseHigh FCF-M2
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)