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Pro Analysis

Breakingviews: Facebook’s torrid growth turns up heat on Snap

Snapchat, Facebook signs under the wooden rollercoaster, Scenic Railway.
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Snapchat, Facebook signs under the wooden rollercoaster, Scenic Railway.

Facebook beat expectations on both the top and bottom line despite concerns its business is poised to slow. The stellar results underscore the grip Facebook has over its nearly 2 billion users. Proving it can overcome such dominance will be rival Snap's big challenge ahead of its IPO.

In recent months, Facebook has been warning its expansion pace will slow as it lessens the amount of inventory available to brands. Yet advertising revenue increased 53 percent year-over-year during the fourth quarter, to $8.6 billion, nearly on par with the third quarter's 59 percent increase. Profit more than doubled, to $3.6 billion. The company won't have to dig deep to pay some of the $500 million that a jury awarded Wednesday to ZeniMax Media for alleged IP theft by virtual-reality subsidiary Oculus.

This year may prove to be different. Facebook hasn't backed off its cautious stance on revenue. It also plans to spend aggressively on R&D, content for its growing video ambitions and marketing. Expenses are forecast to increase some 40 percent to 50 percent from last year's $15.2 billion.