Facebook’s Q3 Earnings Report
Facebook has released its Q3 earnings report, and we’re just a few minutes away from hearing what they had to say. As the company moves toward a new name, it’s also battling legit yet exaggerated criticism. Many questions surround the safety and security of its platform, and its good intentions. As a result, investors are wondering if these concerns are justified. We’ll get to that later.
In the meantime, Facebook’s third-quarter earnings will come at a crucial time: Wednesday, at 2 p.m. PT/5 p.m. ET. The announcement is expected to provide a clearer picture of the company’s revenue growth and the health of its user base. As Facebook continues to expand its user base, it’s expected to enjoy significant growth over the next year. This growth is in part due to its recent efforts to control hate speech and misinformation.
In addition to growing the number of users, Facebook continues to dominate the mobile space, as well as other areas of technology. In the second quarter, Facebook reported 1.13 billion DAUs, a quarter that’s expected to surpass one billion MAUs. While the company has made strides in improving video content and video metrics, SnapChat is starting to pose a real threat. Its rival, SnapChat, boasts more than 60 million daily active users in the U.S., about one-third of the amount of people on its platform. Instagram is only recently starting to monetize, but it’s a cash cow for Facebook.
During the third quarter, Facebook has announced its new financial reporting structure. The company will split its business into several segments in order to make its revenue more manageable. In the fourth quarter, Facebook will report revenue for each of these areas. For the third quarter, the company will report data on Facebook’s core apps, Messenger and WhatsApp. In addition, Facebook will separate its AR and VR operations. The separation will make them more efficient in monetizing its core business.
Wall Street analysts’ questions focused on Facebook’s new products and initiatives. Unlike the first quarter, the company is focusing more on ad revenue than on ad revenue. While the news about artificial intelligence has been a catalyst for the stock, it’s not the only factor for the company to see a boost in its shares. Its growth has been driven by its ability to reach the broadest audience and create new markets.
Facebook’s quarterly results also came with a mix of negative and positive news. The coronavirus pandemic initially signaled a slowdown in the digital advertising sector, but the recovery of the economy has reversed the trend. According to Bloomberg consensus data, ad spending has increased by 30% year-over-year, and Facebook’s revenue from advertising and mobile marketing has soared. With that, it isn’t surprising that the company is doing well.
The company has been dealing with a major crisis in its 17-year history. The Wall Street Journal published a series of tens of thousands of internal documents from Facebook. The stories were picked up by 17 other news outlets in the US. As a result, the documents give us the most detailed look yet at the problems facing the social networking giant. The company’s biggest challenges have been regulating misinformation and hate speech.
While Facebook’s financial results look good, investors are still concerned about the iOS-related headwinds. The iOS-related headwinds have affected ad prices and measurement. Meanwhile, Zuck also mentions that Facebook’s plans include ad revenues from its core app family. A lot of that revenue will be generated by mobile ad purchases, so it’s important to understand how these issues will affect the company’s revenue.
As for its user base, Facebook reported a decline in US and Canadian monthly and daily active users. The decrease is an anomaly. The company attributes the slight decline to the pandemic, but it’s not a good sign. Even if Facebook saw an increase in revenue per user, it’s still a way behind the competition. The company’s recent growth and development of new technologies are reshaping its market.
