Facebook stocks fall as it warns about a slowdown in revenue growth

Facebook stocks fall as it warns about a slowdown in revenue growth

by Pranali Mehta

Online and social media platforms have seen a pandemic instigated boom over the past year, especially during the lockdowns. However, Facebook’s stocks recently plunged by over 3% in premarket trading after the company notified a significant slowdown in revenue growth for the current and next quarter.

Users had been logging on to social media platforms like never before due to the pandemic, to share their personal lives, watch content online and shop from the comfort of their homes to avoid going out in public.

However, this situation is expected to weaken as economies reopen, lockdown restrictions become lenient, and people’s lives return to normal.

David Wehne, the Chief Financial Officer of Facebook, recently stated that they expect year-on-year total revenue growth to slow down considerably on regular basis as they go through periods of increasingly progressive growth.

Wehne further mentioned the challenges Facebook is facing, most importantly the latest update to Apple's privacy policy which has made it difficult for apps to track users and access their personal data without consent.

He stated that the iPhone-maker’s iOS updates will have a significantly higher impact on the ongoing third quarter as compared to the previous one.

These comments outweighed many positives seen in the second quarter including a 56% rise in advertising revenue and a 7% increase in daily as well as monthly active users of the company’s platform.

Notably, Facebook’s total revenues surged 56% to USD 29.07 billion, owing to many companies using digital platforms to sell their goods to individuals.

Meanwhile, diluted earnings per share went up from USD 1.80 to USD 3.61, surpassing the USD 3.04 as predicted by analysts.

In related news, Facebook is gradually expanding its ecommerce efforts, which are anticipated to bring more revenue to the company and make its ad inventory more profitable.

Mark Zuckerberg recently announced that Facebook will  transform from being just a social media network to a "metaverse company"  which will enable users to communicate, game, and work in a virtual environment.

Source credit: https://www.investing.com/news/stock-market-news/facebook-falls-as-it-warns-revenue-growth-may-slow-significantly-2572271

 

 

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...