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Facebook Inc’s User Growth Set to Slow Down Soon (FB)

By U.S. News & World Report

Facebook Inc (ticker: FB) doesn’t have a user growth problem … yet.

Unlike its much smaller and more financially challenged rival Twitter (TWTR), Facebook has been able to consistently grow its user base by healthy margins each year. In the most recent quarter, Facebook’s monthly active users (MAUs) increased by 15 percent to 1.71 billion. Twitter MAUs, by contrast, increased by just 3 percent to 313 million last quarter.

So why’s Facebook the one with the problem?

[See: 10 Best Ways to Buy Tech Stocks.]

The issue is that, simply due to its massive size, user growth can’t continue to hum along at a 15 percent growth rate forever. There simply aren’t enough internet users in the world; as time goes on, Facebook’s user growth will more closely approximate the growth of internet users, which is currently about 7.5 percent and falling, according to internetlivestats.com.

It’s a concept known as the law of large numbers, and it’s something that Berkshire Hathaway (BRK.A, BRK.B) shareholders are intricately familiar with. Warren Buffett has been warning shareholders for years that as Berkshire gets larger, it’s harder for him to earn a market-beating average. The days of 50 percent annual returns are long gone.

The fact that FB is growing at twice the rate of the internet is miraculous. But while 15 percent growth is impressive, we can already see how its girth has gotten in the way of its growth: Four years ago, when FB stock went public, Facebook was growing users at roughly twice its current pace — 29 percent annually.

In another four years, don’t be surprised if Facebook’s user growth is cut in half again.

All things being equal, this trend is an obvious negative for Facebook stock, which is priced like a growth stock at about 60 times earnings. The only way for FB to combat this trend is to focus on another area where it actually can grow: average revenue per user (ARPU).

ARPU is where the growth is. Greg Portell, partner at A.T. Kearney, sees Facebook doubling down on ARPU growth in a few ways.

“First, they are acquiring companies that also compete or will compete for consumer attention. By doing so, they not only take a piece off the competitive chess board, but they also enhance the functionality of their platform,” he says.

Instagram is a great example. In 2012, Facebook bought Instagram for $1 billion. At the time, the photo-sharing service had about 30 million users. Today, Instagram has about 500 million users, and if it weren’t owned by Facebook, it would legitimately be viewed as one of Facebook’s largest competitors.

The second way Facebook’s focusing on ARPU growth is by experimenting with new ad units.

[Read: 7 Stocks That Should Grow With Millennials.]

“In the beginning, Facebook ad sales were a bit like a gangly teenager who hadn’t built up trust among the adults in the advertising world,” Portell says. “Now, the sales teams have professionalized their offering and can credibly go to any advertiser with a ‘we will build it for you’ promise.”

That level of customization makes Facebook ads more effective — and therefore more expensive.

Beth Monaghan, CEO of InkHouse, a public relations company focused on creating brand awareness, says Facebook has created entirely new ad types in order to drum up more revenue from ad buyers.

“In February of this year, Facebook released Canvas ads, a full-screen advertising experience to tell a brand’s story,” Monaghan says. She expects that future innovations in ad formatting may venture into the realm of virtual reality, a space where Facebook’s Oculus is sure to be one of the first movers.

Those should bring higher rates still, as brands and advertisers pay up for increasingly immersive ads.

Even without new formats like virtual reality, Facebook has been aggressively growing ARPU, especially in the U.S. and Canada. In the fourth quarter of 2015, ARPU in that region was $13.54, up from $9 a year before and more than eight times higher than the ARPU in the Asia-Pacific region, which came in at $1.59 in the fourth quarter.

ARPU on a worldwide basis in the fourth quarter was $3.73, up 33 percent from $2.81 in the year-before quarter. Back in the fourth quarter of 2010 — before FB was even public — Facebook’s ARPU was just $1.26. In five years, the company has learned how to squeeze three times more revenue from each user, all while the user base itself has been consistently growing.

It’s no wonder FB stock has soared in recent years — and no wonder some investors think it can continue to go even higher.

[Read: Artificial Intelligence Stocks: 10 Companies Betting on AI.]

If Facebook can triple ARPU again in the next five years — while at the same time steadily (but more slowly) increasing users — then Facebook shareholders will still have quite a lot to “like” in the years ahead.

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Facebook Inc’s User Growth Set to Slow Down Soon (FB) originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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