Facebook (NASDAQ:FB) stock has exploded in the past two years, up about 150%. Its market capitalization has swelled to an impressive $265 billion. This success has brought a lot of attention to its founder and CEO Mark Zuckerberg. Given Facebook's forward-looking valuation and its speculative acquisitions of Oculus and WhatsApp, investors want to understand the mind of the man in charge. Will Zuckerberg truly be able to live up to hyped expectations?
To get a glimpse of some of Zuckerberg's ideas about what's driving Facebook and where the company is headed, here are three quotes from the CEO, taken from the company's most recent earnings call.
Video is a winning medium
With Facebook stock priced for revenue to continue to grow rapidly for years, investors want to know the company still has meaningful catalysts for advertising revenue growth. Probably the most critical driver for Facebook's advertising growth at the moment is video.
"Video continues to be some of the richest and most engaging content for people and publishers. And since the start of the year, Pages are also sharing more than 4% more videos," Zuckeberg said during the call.
He went on to explain that Facebook continues to invest in video as a driver for its business.
This quarter, we updated our news feed ranking to help people see more of the videos they care about, and also began testing new options for video monetization to help our partners build their businesses. We're excited about the potential for continued work here.
One of the reasons video ads have been such a significant catalyst for ad revenue at Facebook is because so many consumer-generated videos are shared and watched already. This makes video ads a natural part of the news feed experience.
Facebook's advertising revenue in Q2 was up 43% from the year-ago quarter. And Facebook management cites video as a key driver.
Virtual reality will be social
When Facebook announced it would acquire virtual reality company Oculus in 2014, many investors were scratching their heads. What does Facebook's mission of connecting the world have to do with virtual reality goggles, investors wondered?
Since the surprise announcement of the acquisition, investors have begun to warm up to the company's interest in virtual reality. But plenty of uncertainty remains. This is why investors are always looking for more insight from Zuckerberg about how the company plans to tap into this asset.
During Facebook's second-quarter call, Zuckerberg acknowledged several reasons the social network was happy to pony up $2 billion to acquire Oculus:
- Virtual reality is a natural extension of a growing trend toward richer and more immersive content. In other words, it's the next thing after video, Zukerberg said.
- It is poised to serve as a gaming platform -- an area Facebook continues to show interest in.
- Perhaps most interestingly, Zuckerberg said he believes virtual reality will enable new ways to socialize. And this is the aspect of virtual reality Zuckerberg seems to be most excited about.
"Once you start to get more of a critical mass, I think you can start to get social applications, which is what we as a company are more interested in over the long term -- and think have a huge amount of potential."
Messenger monetization: On its way
Speaking about Facebook's two messaging apps, Messenger and WhatsApp, Zuckerberg ensured investors during the call that the company is thinking about how these business can be monetized. With the company paying about $20 billion to acquire WhatsApp, investors have been itching to hear more details about monetization.
Here's what Zuckerberg said:
But the long‐term bet is that by enabling people to have good organic interactions with businesses, that will end up being a massive multiplier on the value of the monetization down the road when we work on that and really focus on that in a bigger way. So, we asked for some patience on this to do this correctly.
Therefore, when it comes to monetizing messaging, Facebook basically appears to be aiming to find a way to charge businesses money to target and connect with users. But Zuckerberg wants to build this out organically first -- similar to the way Facebook did with business Pages before it started displaying advertisements.
Zuckerberg's strategies for connecting the world and monetizing social platforms may sometimes seem a bit "out there." But if history is any indication of how Zuckerberg's current bets will play out in the future, the company could simply be one step ahead of everyone else.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.