Facebook Warns of Significant Slowdown in Growth, Imposes Vaccine on U.S. Staff

July 28 (Reuters) – Facebook Inc (FB.O) said on Wednesday that it expects revenue growth in the third and fourth quarters to “decelerate significantly”, pushing down the social media giant’s shares of about 5% for extended exchanges.

The warning eclipsed the company’s pace on Wall Street estimates for quarterly revenue, bolstered by rising ad spend as businesses ramp up their digital presence to respond to consumers spending more time and money in line.

Facebook said it expects Apple’s recent update (AAPL.O) to its iOS operating system to impact its ability to target ads and therefore ad revenue in the third quarter. Changes to privacy made by the iPhone maker make it harder for apps to track users and prevent advertisers from accessing valuable data to target ads.

The company also announced on Wednesday that it would require anyone working in its U.S. offices to be vaccinated against COVID-19.

Monthly active users were 2.90 billion, up 7% from the same period last year, but analysts are not expecting 2.92 billion and mark the slowest growth rate since at least three years, according to IBES data from Refinitiv.

“The slowdown in user growth is noticeable and highlights the challenges of engagement as the world opens up. Most importantly, Facebook is the most exposed to Apple’s privacy changes, and it seems it starts to impact the outlook from 3Q onwards, ”said Ygal Arounian, analyst at Wedbush Securities.

“Everyone will be watching closely the evolution of their ad targeting system to see how that plays out given its huge role in helping Facebook monetize its apps,” said Tom Johnson, digital director of WPP Mindshare.

The company’s total revenue, which is mainly made up of advertising sales, reached $ 29.08 billion in the second quarter, from $ 18.69 billion a year earlier, beating analyst estimates by 27. $ 89 billion, according to IBES data from Refinitiv.

Facebook, like its peers, has seen increased demand for digital ads as the pandemic has pushed consumers to buy largely online, forcing several companies to build online stores and marketplaces using media platforms. social.

Its advertising revenue rose 56% to $ 28.58 billion in the second quarter ended June 30, Facebook said. He indicated a 47% increase in the price per ad.

“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 go through periods of growth of stronger and stronger, ”CFO Dave Wehner said in the earnings release.

The world’s largest social network has stepped up its e-commerce efforts, which are expected to bring additional revenue to the business and make its advertising inventory more valuable. The push will be key to how Facebook, which hosts more than one million online “stores” on its main app and Instagram, can grow its advertising business amid the impact of Apple’s changes.

It is also on the offensive to attract the biggest social media personalities and their fans, competing with platforms like Alphabet’s YouTube (GOOGL.O) and the short video app TikTok, which recently hit 3. billion downloads worldwide. Facebook announced this month that it will invest more than $ 1 billion to support content creators until the end of 2022. read more

Second-quarter net income more than doubled to $ 10.4 billion, or $ 3.61 per share, from $ 5.18 billion, or $ 1.80 per share, a year earlier. Analysts had expected earnings of $ 3.03 per share.

Jesse Cohen, senior analyst at Investing.com, called it a “successful quarter” for Facebook, but warned: “Growing regulatory concerns and growing antitrust scrutiny will be major headwinds for Facebook in the coming months, because the Biden administration made it clear that it wanted to master big technology. “

The company continues to come under pressure from global lawmakers and regulators, including the United States Federal Trade Commission which has until August 19 to re-file its antitrust complaint against the company and a group of ‘States that said Wednesday they would appeal the judge’s dismissal. their trial. Read more

Facebook hit a market cap of $ 1,000 billion for the first time last month when the judge dismissed the initial complaints.

The company, which has long been criticized by lawmakers over disinformation and other abuse on its platform, has also come under scrutiny from President Joe Biden’s administration. for handling false COVID-19 claims on its platforms. At Facebook’s Washington, DC office on Wednesday, a group of critics set up a body bag installation 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

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