Facebook beats previous estimates, but warns that growth will ‘slow down’ in the second half of the year

Facebook Inc. is the latest tech giant to benefit from a wave of digital advertising, but worrying guidance in the second half of the year saw its shares fall 5% initially during extended trading Wednesday.

The social media giant FB,
+1.49%,
which relies almost exclusively on advertising, said it made $10.39 billion, or $3.61 per share, ahead of forecasts of $3.04 per share, according to analysts polled by FactSet. Facebook’s revenue shot up 56% to $29.08 billion, surpassing estimates of $27.85 billion.

“In the third and fourth quarters of 2021, we expect total year-over-year revenue growth to slow significantly on a sequential basis as we experience periods of increasingly strong growth,” said David Wehner, Facebook’s chief financial officer in a statement. pronunciation announcing the results. “We continue to expect more ad targeting headwinds in 2021 due to regulatory and platform changes, especially the recent iOS updates, which we expect to have a greater impact in Q3 than Q2. quarter.”

Monthly active users, a key barometer of Facebook’s global growth, improved 7% to 2.9 billion, in line with expectations of 2.91 billion. Daily active users in the US and Canada, however, remained flat.

Facebook, such as Google parent Alphabet Inc. GOOGL,
+3.18%

GOOG,
-0.30%,
Twitter Inc. TWTR,
+2.39%,
and Snap Inc. snap,
+2.96%
before it, benefited greatly from a wave of online advertising as more small businesses use social media and search to reach consumers during the pandemic.

At the same time, non-advertising revenues from e-commerce and AR/VR continued to grow, increasing 36% to $497 million. In a recent interview with The Verge, Zuckerberg called augmented and virtual reality the next frontiers in a years-long search for its billions of users to communicate, shop and sell products. During a conference call with analysts At the end of Wednesday, Zuckerberg emphasized the importance of the metaverse, a virtual platform that he sees as the successor to the mobile internet. “The metaverse will be the next chapter for us as a company, from people who see us as a social networking company to a metaverse company,” he said.

“We expect a super rebound from advertising, but more importantly, we are looking at the impact of IDFA [Apple Inc.’s
AAPL,
-1.22%
Identifier for Advertisers] in the second half of the year and whether Facebook can evolve the user experience through virtual reality,” Dan Flax, senior research analyst at investment firm Neuberger Berman, told MarketWatch before announcing the profit. “Facebook should also explain to regulators how data is used.”

Facebook’s ad-haul comes a day after Google reported record $61.9 billion in revenue and a whopping $18.5 billion in revenue.

Read more: Google’s wave of digital ad sales helps it crush revenue and revenue estimates

What makes the results all the more eye-opening — or vice versa, federal regulators’ point proves — is that Facebook, Alphabet, and Apple Inc. publishing outrageous numbers despite increased antitrust investigation by the Department of Justice, Federal Trade Commission, state attorneys general, class action attorneys and consumer rights groups.

Facebook shares are up 37% so far this year, while the broader S&P 500 index SPX,
-0.02%
gained 17% in 2021.

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