Apple, Growth, Facebook, Us

Apple, Growth

Facebook warns growth to slow significantly, mandates vaccine for US staff

Facebook warns growth to slow significantly, mandates vaccine for US staff

29/7/2021 1:05:00 AM

Facebook warns growth to slow significantly, mandates vaccine for US staff

: Facebook Inc said on Wednesday it expects revenue growth in the third and fourth quarters to 'decelerate significantly,' sending the social media ...

Business:Facebook Inc said on Wednesday it expects revenue growth in the third and fourth quarters to"decelerate significantly," sending the social media giant's shares down about 5per cent in extended trading.FILE PHOTO: A Facebook panel is seen during the Cannes Lions International Festival of Creativity, in Cannes, France, June 20, 2018. REUTERS/Eric Gaillard/File Photo

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29 Jul 2021 05:45AMShare this contentBookmarkREUTERS -Facebook Inc said on Wednesday it expects revenue growth in the third and fourth quarters to"decelerate significantly," sending the social media giant's shares down about 5per cent in extended trading.

The warning overshadowed the company's beat on Wall Street estimates for quarterly revenue, bolstered by increased advertising spending as businesses build their digital presence to cater to consumers spending more time and money online.Advertisement headtopics.com

AdvertisementFacebook said it expects Apple's recent update to its iOS operating system to impact its ability to target ads and therefore ad revenue in the third quarter. The iPhone maker's privacy changes make it harder for apps to track users and restrict advertisers from accessing valuable data for targeting ads.

The company also announced on Wednesday that it would require anyone working at its U.S. offices to be vaccinated against COVID-19.Monthly active users came in at 2.90 billion, up 7per cent from the same period last year but missing analyst expectations of 2.92 billion and marking the slowest growth rate in at least three years, according to IBES data from Refinitiv.

"The user growth slowdown is notable and highlights the engagement challenges as the world opens up. But importantly, Facebook is the most exposed to Apple's privacy changes, and it looks like it is starting to have an impact to the outlook beginning in 3Q," said Ygal Arounian, an analyst at Wedbush Securities.

AdvertisementAdvertisement"Everyone will be watching any developments to their ad targeting system closely to see how that plays out given its huge role in helping Facebook monetise its apps," said Tom Johnson, WPP Mindshare's chief digital officer. headtopics.com

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The company's total revenue, which primarily consists of ad sales, rose to US$29.08 billion in the second quarter from US$18.69 billion a year earlier, beating analysts' estimates of US$27.89 billion, according to IBES data from Refinitiv.Facebook, like its peers, has seen increased demand for digital ads as the pandemic drove consumers to shop largely online, forcing several businesses to create online stores and markets using social media platforms.

Its revenue from advertising rose 56per cent to US$28.58 billion in the second quarter ended June 30, Facebook said. It pointed to a 47per cent increase in price per ad.Advertisement"In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth," Chief Financial Officer Dave Wehner said in the earnings release.

The world's largest social network has been ramping up its ecommerce efforts, which are expected to bring additional revenue to the company and make its ad inventory more valuable. The push will be key to how Facebook, which hosts more than 1 million online"Shops" on its main app and Instagram, can grow its ad business amid the impact of Apple's changes.

It is also on the offensive to attract top social media personalities and their fans, competing with platforms like Alphabet's YouTube and short-video app TikTok, which recently hit 3 billion global downloads. Facebook said this month it would invest more than US$1 billion to support content creators through the end of 2022. headtopics.com

Net income in the second quarter more than doubled to US$10.4 billion, or US$3.61 per share, from US$5.18 billion, or US$1.80 per share, a year earlier. Analysts had expected a profit of US$3.03​ per share.Jesse Cohen, senior analyst at Investing.com, called it a"blockbuster quarter" for Facebook but warned:"Growing regulatory concerns and mounting antitrust scrutiny will be major headwinds for Facebook in the months ahead as the Biden administration has made it clear it wants to rein in big tech."

The company continues to face pressure from global lawmakers and regulators, including from the U.S. Federal Trade Commission which has until Aug. 19 to refile its antitrust complaint against the company and from a group of states who said on Wednesday they would appeal the judge's dismissal of their lawsuit.

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Facebook hit US$1 trillion market cap for the first time last month when the judge threw out the original complaints.The company, which has long been under fire from lawmakers over misinformation and other abuses on its platform, has also come under renewed scrutiny from President Joe Biden's administration over the handling of false claims about COVID-19 on its platforms. At Facebook's office in Washington, D.C., on Wednesday, a group of critics set up an installation of body bags to protest the issue.

(Reporting by Nivedita Balu in Bengaluru and Elizabeth Culliford in New York; Additional reporting by Danielle Kaye in New York and Sheila Dang in Dallas; Editing by Maju Samuel and Lisa Shumaker) Read more: CNA »

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