In after-hours trading on Wednesday, concerns about slowing revenue growth pushed Facebook’s stock price lower. Not long before that, the company reported that its second-quarter earnings doubled due to a substantial increase in advertising revenue.
But CEO Mark Zuckerberg has set his sights on areas beyond the second half of 2021. He believes people will experience the next phase of the internet. Augmented reality and virtual reality that may be known in other parts of the world plus some science fiction, Zuckerberg and others call it the “meta universe”, which is a futuristic and somewhat dark concept, which includes AR, VR and new unimagined forms to connect. each other through technology.
Zuckerberg expects the Metaverse to be the next big event after mobile internet, despite its uneven track record in predicting recent major trends. For example, at the Facebook f8 conference four years ago, Zuckerberg predicted that in the future he will wear headphones and sit in the bedroom for a virtual vacation with distant friends and family, or use his smartphone camera to virtually decorate his apartment. ruined. .
So far, this has not been achieved. Then there’s Libra, now known as Diem, a cryptocurrency project launched by Facebook to much fanfare in 2019. At the time, Facebook envisioned Libra as an emerging global digital currency; Since then, due to regulatory and commercial opposition, its ambitions have been greatly reduced.
In a conference call with analysts, Zuckerberg referred to Metaverse as “the next generation of the Internet and the next chapter of our business,” and said it would create “a whole new experience and economic opportunity.”
For now, however, Facebook still needs to grapple with more mundane issues, such as anti-trust crackdowns in the United States and elsewhere, and concerns about how to deal with political and vaccine-related misinformation on its platform. The company said that, as before, it expects this year’s ability to target ads to face challenges, including regulatory pressures and privacy changes from Apple, which make it difficult for companies like Facebook to track those who may choose not to participate. form of advertising. Surveillance.
Although the social network’s profits doubled in the second quarter, in part due to the higher average price it charges for ads to almost 3 billion users. However, the company said it does not expect revenue to continue growing at such an alarming rate in the second half of the year. Debra Aho Williamson, an analyst at
eMarketer, said: “This quarter’s results are very strong and have hardly been affected by Apple’s iOS update so far,” noted that Facebook’s revenue in the same period last year Growth is the slowest since it went public, so this is a simple comparison. “But it is also due to the huge demand for advertising on Facebook and Instagram. The more intense the competition, the higher the price of advertising.”
Additionally, Facebook said Wednesday that it will require vaccinations for employees working in the United States. There will be exceptions for medical and other reasons. Google announced a similar policy earlier in the day.
The Menlo Park, California-based company had revenues of US$10.390 million (approximately Rs 77,170 crore) from April to June, or earnings per share of US$3.61 (approximately Rs 270). A year ago, this exceeded US$5.18 billion (approximately Rs 38,460 crore), or US$1.80 per share (approximately Rs 130). Revenue increased from 18.32 billion US dollars (approximately 136,030 crore) to 28.58 billion US dollars (approximately 212,170 crore). According to a survey by FactSet, analysts on average expect earnings per share of US$3.04 (approximately 230 rupees) and revenue of US$24.85 billion (approximately 184.51 million rupees).
The factor driving ad revenue growth is that the average price of each ad has increased 47% year-over-year and the number of ads shown to people has increased by 6%. Facebook said it expects the price of advertising, rather than the number of ads placed, to continue to drive growth.
The company predicted the uncertainty of 2021 as early as January, and said its revenue in the second half of the year may face tremendous pressure. Because revenue grew so fast in the second half of 2020, Facebook said at the time that it could be difficult to keep up with this rate.
Williamson said the third quarter will be an important quarter for the company, “because the full impact of the Apple update has started to show.”
“We will better understand how Facebook can adjust its core ad targeting products to manage how much information it can use has decreased,” he said. In June, Facebook had 4.444 monthly users, or 2.9 billion, a 7% year-on-year increase. 4,444 shares fell US $ 11.77 (approximately Rs 870), or 3.2%, to US $ 373.28 (approximately Rs 27,710) in after-hours trading. Hours earlier, the shares reached a record high of $ 377. 55 (approximately Rs 28,030) expected result, so the decrease is not unexpected.