Facebook Can Afford to Redecorate

Facebook (NASDAQ: FB  ) is changing again.

The social networking giant is hosting a media event tomorrow at its headquarters. There isn't any need to guess what this will be about. The invitation clearly explains that tech journalists are being invited to "come see a new look for News Feed" at Facebook.

Facebook is never shy about mixing things up. There's an outcry from users when things change. They adapt. Facebook winds up making more money and attracting more net new users, validating the tweaks.

Rinse. Repeat.

However, Facebook doesn't peel back the curtain for media types unless it's significant. Graph Search and Facebook Gifts are some of the more recent event-backed initiatives.

Some are speculating that this will be a more photo-centric facelift, and that makes sense given the popularity of Flipboard and Facebook's acquisition last year of Instagram. However, investors will want to know how Facebook plans to monetize the new initiatives.

Facebook's been pretty good about milking more money off of its free site with more than a billion active users. Revenue climbed 40% in its latest quarter, even though monthly active users have only grown by 25% over the past year.

Facebook doesn't need to take chances, but it can afford to do exactly that. Where will people go? Google is pushing Google Plus as a Facebook alternative, but it has yet to sway most Facebook users. LinkedIn just celebrated passing the 200 million member milestone, but that only means that the career-oriented social networking site has just a fifth as many users as Facebook.

There may very well come a time when Facebook does go too far, with Google and LinkedIn there to make the most of the opportunity. However, the likely news tomorrow will be modest changes that will enhance both user experience and the monetization potential of the newsfeed.

Facebook has come too far to get too greedy.

Due diligence makes a friend request
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