Facebook slumps but Zuckerberg is taking the (very) long view

Facebook (FB) may have beat Wall Street expectations for the sixth straight quarter, but the social network giant warned Tuesday that costs would increase from 55 to 75 percent in 2015.

CEO Mark Zuckerberg isn’t overly concerned with next year though; he’s looking long term. “Zuckerberg was very clear on the earnings call [Tuesday] that he’s looking ten years down the road,” says Yahoo Finance editor in chief, Aaron Task. “If you’re going to hold Facebook,” says Task, “You are putting faith that Mark Zuckerberg is going to be right over the very long term.”

And what has investors and analysts guessing most about the long term? Facebook’s recent bet on international text messaging app, WhatsApp, a deal worth $21.8 billion. In the six months ending in June of this year, WhatsApp brought in just about $15.9 million in revenue.

“It looks pretty crazy right now,” says Yahoo Finance technology reporter, Aaron Pressman. “I’m not saying WhatsApp is worthless. I am sure they are going to find a way to monetize it eventually.”

How Facebook plans to make money off WhatsApp is the big question for investors and analysts. Pressman says, “I think the problem with WhatsApp is…if they start putting ads and stickers and other things and they alienate the users.”

The risk of turning off loyal WhatsApp users is huge. There’s no shortage of other apps with features similar to WhatsApp, like Line, Viber, and BBM, the app formerly known as Blackberry Messenger.  Pressman says, “It seems like these kinds of messaging services crop up all over the place when they add a cool new feature that lots of people want to use.”

But Zuckerberg is confident about WhatsApp and other moves Facebook may make. On Tuesday’s earnings call, he told investors, “For us, products don't really get that interesting to turn into businesses until they have about 1 billion people using them.”

Pressman says, “It sounds like he wants to be more like Jeff Bezos and really spend to the edge of what he can spend.”  But that’s a strategy that has hurt Bezos’ company, Amazon.com (AMZN), of late.

Facebook reported stronger-than-expected quarterly revenue, $3.2 billion. That’s an increase of 59%. The company reported a $806 million profit, up from $425 million during the same quarter last year. Shares of Facebook fell though on 2015 spending projections.

Pressman says Zuckerberg has always had this long term outlook. Facebook, he says, has “always been this outward looking company and the question is right. Do you trust it? Do you want to go along for the ride?”