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Facebook blows up previous estimates, but warns that growth will slow in the second half of the year

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Facebook is the latest tech giant to benefit from a surge in digital advertising, but troubling guidance in the second half of the year initially sent its shares down 5% in extended trading on Wednesday.


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The social media giant, which relies almost exclusively on advertising, said it earned $10.39 billion, or $3.61 per share, beating expectations of $3.04 per share, according to analysts polled by FactSet. Facebook sales jumped 56% to $29.08 billion, beating estimates amounting to $27.85 billion.


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“In the third and fourth quarters of 2021, we expect year-over-year aggregate revenue growth rates to significantly slow on a sequential basis with periods of increasingly powerful growth,” said David Weiner, Facebook’s chief financial officer, in a statement announcing. Results. “We persevere to expect headwinds for ad targeting in 2021 from regulatory and platform changes, particularly the recent iOS updates, which we expect will have a greater impact in Q3 than in Q2.”

Monthly active users, a key measure of Facebook’s growth globally, improved 7% to 2.9 billion, in line with expectations of 2.91 billion.

Facebook, like Google’s parent company Alphabet Inc. Twitter Inc. and Snap Inc. Prior to that, it had benefited greatly from the wave of online advertising as more little businesses are using social media and search to reach consumers during the pandemic.

Meanwhile, non-advertising revenue from e-commerce and AR/VR continued to grow, up 36% to $497 million. In a recent interview with The Verge, Zuckerberg called augmented and virtual reality as the next frontier in a years-lengthy quest for billions of users to join, shop and sell products.

“We are expecting a superior ad rebound but more importantly we are looking at the impact of IDFA [Apple Inc.’s Identifier for Advertisers] In the second half of the year and whether Facebook can improve the user experience through virtual reality,” Dan Flax, senior research analyst at investment firm Neuberger Berman, told MarketWatch prior the earnings announcement. “Facebook should also explain to regulators how the data is used. “

The volume of ads on Facebook comes a day following Google announced record profits of $61.9 billion and a whopping $18.5 billion in profits.

Read more: Wave of Google’s digital advertising sales is helping to smash revenue and earnings estimates

What makes the results more attractive – or vice versa, proves the point of the federal regulators – is Facebook, Alphabet and Apple Inc. They put up shocking numbers despite heightened antitrust scrutiny by the Department of Justice, the Federal Trade Commission, state attorneys general, class action attorneys and consumer rights organizations.

Facebook shares are up 37% so far this year, while the broader S&P 500 is up 17% in 2021.

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