Facebook warns of a “significant” slowdown in revenue growth

Facebook Inc updates

Facebook warned that its revenue growth rate will “significantly slow” in the next few quarters, causing its stock price to fall in after-hours trading.

The social network’s warning came as it announced substantial revenue and profits for the second quarter. Mark Zuckerberg’s social media company reported that revenue in the second quarter rose 56% to $29.1 billion, exceeding analyst expectations of $27.9 billion.

The company attributed the growth to a 47% increase in advertising prices, indicating strong brand demand.

Facebook’s net income increased by 101% year-on-year, reaching 10.3 billion U.S. dollars, or 3.61 U.S. dollars per share, which was much higher than the market consensus of 8.7 billion U.S. dollars, or 3 U.S. dollars per share.

However, the company warned that, supported by the pandemic recovery, the rate of revenue growth will “successfully slow down significantly as we experience periods of increasingly strong growth.”

Facebook’s revenue at a glance

Actual Comparative estimate

income: $29.1 billion Compared to US$27.9 billion

Net income: $10.39 billion Compared to 8.7 billion U.S. dollars

Earnings per share: 3.61 USD Compared to $3.00

Advertising sales: $28.58 billion Compared to 27 billion U.S. dollars

Monthly active users: 2.9 billion Compare 2.9 billion

Estimated source: S&P Capital IQ and Refinitiv

The stock price fell nearly 4% in after-hours trading to around $360.

At present, Facebook seems to be dismissive of the impact of Apple’s new privacy policy, which prohibits apps and advertisers from collecting data about iPhone users without their explicit consent. Facebook has repeatedly warned that these changes may hurt ad spending.

However, it warned that these changes will have a “greater impact” in the next quarter than in the previous quarter.

As of June 30, monthly active users increased by 7% year-on-year to 2.9 billion, in line with expectations.

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