Facebook users increased due to coronavirus

A better end to a tough month for Facebook CEO Mark Zuckerberg.
Credit
Composite images Bloomberg LP iStock

A better end to a tough month for Facebook CEO Mark Zuckerberg. Credit Composite images Bloomberg LP iStock

Facebook projected that ad revenue for the third quarter is likewise expected to grow faster than Wall Street estimates, despite an unprecedented ad boycott in July that drew the support of companies including Unilever, Starbucks and Coca-Cola.

Advertising revenues in particular defied all odds, clocking a 10% growth during a quarter that was completely absolved in the pandemic. The social media platform reported 1.79 billion daily average users and 2.70 billion monthly average users as of June 30, outperforming the FactSet consensus estimates of 1.70 billion daily average users and 2.60 billion monthly average users.

On a call with investors Thursday, Zuckerberg said he was "troubled" by calls to "go after" targeted advertising online. "We expect our full quarter year-over-year ad revenue growth rate for the third quarter of 2020 will be roughly similar to this July performance". "In many ways, in this hard time for people around the world, our services are more important now than ever".

Facebook's quarterly revenue grew to 18.68 billion dollars, up 11 percent year-over-year from 16.9 billion dollars, with advertising revenue rising 10 percent to 18.321 billion dollars, compared with 16.624 billion dollars in the same period last year. "This would reduce opportunities for small businesses so much that it would probably be felt at a macroeconomic level".

More recently, Facebook said it is seeing signs of normalization in user growth and engagement as shelter-in-place measures have eased around the world, particularly in developed markets where Facebook's penetration is higher.

"Since Covid's inception, people have used our services to keep in touch with friends and family that they can't be with in person, and to keep their businesses online even when physical stores are closed", Zuckerberg said on the call.

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"Although Facebook doesn't release details about Instagram's revenue, we believe that Instagram has been a rapidly growing contributor to the company's total revenue, and that its success is helping to buoy Facebook as a whole", she said.

Debra Aho Williamson, eMarketer principal analyst, said: "Not surprisingly, Facebook's ad business was negatively affected by the global pandemic, but the impact was much less than many had expected". "It's true that making it more hard to target ads would affect the revenue of companies like Facebook, but the much bigger cost of such a move would be to reduce the effectiveness of the ads and opportunities for small businesses".

Use of Facebook has surged as people staying close to home due to the pandemic turn to the platform to virtually connect with friends and loved ones.

Alphabet shares were up 1 per cent after the company posted revenue and profit that beat expectations but not by a fantastic amount.

Previously, growth of 18 percent in the first quarter this year was its slowest on record. It had been US$2.6 billion a year earlier, reflecting a US$2 billion charge related to Facebook's privacy settlement with the Federal Trade Commission. Analysts, on the other hand, are expecting a lower 7.9% growth in its revenue in Q3.

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