Facebook 's (NASDAQ: FB) stock got hit hard after its second-quarter earnings call , as investors focused on the social-media giant's forecast of lower revenue growth and operating margins in the quarters ahead.
But Facebook's management team shared some other important information during the call that many investors appear to be overlooking. Here are some key quotes you won't want to miss.
Investments will create value
Much has been made about Facebook's operating costs rising, but less has been said about the positives these investments will bring about. Facebook is on a mission to fight misinformation. It's reducing incentives for people to spread fake news and strengthening its artificial intelligence capabilities to better identify false information. Together, these investments should help Facebook improve the safety and integrity of its services, thereby making them more valuable to its users.
Privacy concerns may be overdone
The enactment of the General Data Protection Regulation (GDPR) in the European Union did lead to a slight decline in active users, as expected. However, with the "vast majority" of users electing to allow Facebook to use their personal information in order to provide more-targeted ads, claims that privacy concerns would crater the social-media titan's business now appear far-fetched. Nevertheless, Facebook is spending heavily to improve its privacy features in order to win back whatever user trust it lost as a result of the Cambridge Analytica debacle -- and to maintain that trust, once rewon.
A focus on Groups
Facebook wants to use Groups as a means to boost engagement on its platform. The company is making it easier to create and grow a group, in order to make it less time-consuming for administrators. Facebook also plans to better promote the most engaging groups, as part of its goal of "helping 1 billion people be a part of meaningful communities" in the next five years. And the more Facebook can increase engagement, the more valuable its platform will be to users and advertisers alike.
Helping smaller businesses
Large enterprises will likely always comprise a major portion of Facebook's ad revenue, but small businesses represent a sizable growth opportunity. Facebook is launching new tools to help even the playing field, by making it easier for smaller advertisers to maximize their return on investment. The more successful Facebook is in this area, the larger its total addressable market opportunity will ultimately be.
Instagram's staggering growth
Many skeptics derided Facebook's decision to acquire Instagram for $1 billion in 2012. Back then, Instagram had 30 million users. But since that time, Instagram has grown at a torrid rate, and now boats more than a billion active users. In fact, Instagram has become so valuable that analysts believe it could be worth more than $100 billion today . All told, Facebook's purchase of Instagram may go down in history as one of the best corporate acquisitions of all time.
Facebook's user base is strong and growing
While much has been said about Facebook's slowing growth, one thing that should not be overlooked is its awe-inspiring scale. With more than 1.5 billion people using Facebook every day and 2.5 billion using its apps every month, the company's reach is incredible. Moreover, its daily and monthly active users both grew 11% year over year, so this is not a declining business.
Investors may need to become accustomed to a slower earnings growth rate in future quarters, but Facebook's core business remains quite healthy.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
