Facebook posted its second quarter earnings Wednesday, beating expectations with $29 billion in revenue.<\/p>\n
The world\u2019s biggest social media company was expected to report $27.8 billion in revenue for the quarter, a 50% increase from the same period in 2020. Facebook reported earnings per share of $3.61, which also bested expectations<\/a>. The company\u2019s revenue was $18.6 billion in the same quarter of last year.<\/p>\n In the first financial period to really reflect a return to quasi-economic normalcy after a very online pandemic year, Facebook met user growth expectations. At the end of March, Facebook boasted 2.85 billion monthly active users across its network of apps. At the end of its second quarter, Facebook reported 2.9 billion monthly active users, roughly what was expected.<\/p>\n The company\u2019s shares opened at $375 on Wednesday morning and were down to $360 in a dip following the earnings report.<\/p>\n In spite of a strong quarter, Facebook is warning of change ahead \u2014 namely impacts to its massive ad business, which generated $28.5 billion out of the company\u2019s $29 billion this quarter. The company specifically named privacy-focused updates<\/a> to Apple\u2019s mobile operating system as a threat to its business.<\/p>\n \u201cWe continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter,\u201d the company stated its investor report outlook.<\/p>\n Facebook isn\u2019t happy about Apple\u2019s upcoming ad tracking restrictions<\/a><\/p>\n<\/blockquote>\n\n On the company\u2019s investor call, Facebook CEO Mark Zuckerberg pointed to Facebook\u2019s plans to reduce its reliance on ad revenue, noting the company\u2019s expanded efforts to attract and support content creators and its e-commerce plans in particular. \u201cWe want our platforms to be the best place for creators to make a living,\u201d Zuckerberg said, adding that the company plans to monetize creator tools starting in 2023.<\/p>\n Zuckerberg also emphasized Facebook\u2019s grand aspirations for social experiences in VR. \u201cVirtual reality will be a social platform, which is why we\u2019re so focused on building it,\u201d Zuckerberg said.<\/p>\n In the call, Zuckerberg also noted Facebook\u2019s prospects for monetizing digital goods like clothing and avatars in virtual-reality-based social networks. Facebook refers to its conception of an interconnected web of virtual social networks as the \u201cmetaverse\u201d \u2014 a corporate nod to Neal Stephenson\u2019s 1992 futurist sci-fi novel \u201cSnow Crash.\u201d<\/p>\n No matter what Facebook planned to report Wednesday, the company is a financial beast. Bad press and user mistrust in the West haven\u2019t done much to hurt its bottom line and the company\u2019s ad business is looking as dominant as ever. Short of meaningful antitrust reform in the U.S. or a surging competitor, there\u2019s little to stand in Facebook\u2019s way. The former might still be a long shot given partisan gridlock in Congress, even with the White House<\/a> involved<\/a>, but Facebook is finally facing a threat from the latter.<\/p>\n For years, it\u2019s been difficult to imagine a social media platform emerging as a proper rival to the company, given Facebook\u2019s market dominance and nasty habit of acquiring competitors or brazenly copying their innovations, but it\u2019s clear that TikTok is turning into just that. YouTube is huge, but the platforms matured in parallel and coexist, offering complementary experiences.<\/p>\n Facebook predicts \u2018significant\u2019 obstacles to ad targeting and revenue in 2021<\/a><\/p>\n<\/blockquote>\n\n TikTok hit 700 million monthly active users in July 2020 and surpassed three billion global downloads earlier this month, becoming the only non-Facebook owned app to do so, according to data from Sensor Tower<\/a>. If the famously addictive short form video app can successfully siphon off some of the long hours that young users spend on Instagram and Facebook\u2019s other platforms and make itself a cozy home for brands in the process, the big blue giant out of Menlo Park might finally have something to lose sleep over.<\/p>\n Can advertising scale in VR?<\/a><\/p>\n<\/blockquote>\n\n\n
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