is expected to post a sharp increase in quarterly revenue and profit as it benefits from a wave of digital ad spending while facing the prospect of Apple Inc.’s privacy changes hampering its ad-targeting capabilities.
The social-media giant’s first-quarter earnings report, due Wednesday afternoon, should reflect the past year’s trend of people spending more time and money online and advertisers redirecting their resources to take advantage of that shift. The parent of Facebook, Instagram and WhatsApp also likely benefited from an increase in consumers making purchases from brands directly through its apps, analysts say.
Facebook’s revenue is projected to rise 34% from a year earlier to $23.73 billion, according to analysts polled by FactSet. Profit is projected to rise 39% to $6.8 billion, or $2.35 a share.
The anticipated strong results come as Google parent
on Tuesday said that it shattered sales records for the first quarter and that profit more than doubled. Also Tuesday image-sharing platform
said revenue jumped 78%, and last week
said its quarterly revenue rose 66% as it gained more Snapchat users.
is scheduled to release its quarterly financial report Thursday.
Facebook’s stock has gained about 15% over the past three months, versus about 11% for the S&P 500 index.
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Apple’s recent iPhone software updates enable users to restrict apps from tracking their data for advertising purposes. Facebook Chief Executive
has criticized the changes, saying they will hurt small businesses. Apple has said it wants app makers to first obtain users’ permission to enable such tracking.
Despite Facebook’s complaints against Apple’s move, which has also vexed the broader advertising industry, analysts say they are confident the social-media giant will find adequate workarounds.
The company should be able to make do with its own vast collection of user data to help advertisers identify likely customers, they say, plus Apple’s new ad-tracking rules could prompt more brands to consider selling products directly to consumers through Facebook’s family of apps.
“Every year we go through some new ad targeting headwind driven by privacy changes of some kind,” said AB Bernstein analyst Mark Shmulik. “Everyone adjusts and we move forward with whatever the news rules are.”
Facebook is facing scrutiny from users over its content-moderation practices, including its decision to indefinitely ban former President
from Facebook and Instagram, as well as from regulators over its business practices. The company has since referred the ban of Mr. Trump, which was done in the wake of the U.S. Capitol riot, to its independent oversight board to determine whether he should be allowed back. The board earlier this month said it would make a ruling in the coming weeks as it extended its time frame to evaluate public comments.
The Federal Trade Commission and 46 states in December filed antitrust lawsuits against Facebook, accusing it of buying and freezing out small startups to stifle competition. Facebook has sought to dismiss both lawsuits, saying the FTC’s case aims to rewrite history and ignores the tech industry’s competitive dynamics and that the states’ case doesn’t prove that “citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of the company’s actions.
With Facebook’s forthcoming results, analysts say they plan to continue monitoring the progress of company efforts to expand its business beyond advertising to include areas such as e-commerce and augmented and virtual reality.
Analysts expect Facebook to provide an update on the performance of its new shop tab on Instagram and carts on WhatsApp.
Facebook ended the fourth quarter with 1.84 billion daily users and 2.8 billion monthly users. Analysts expect those numbers to increase slightly in the first quarter, including in the U.S. and Canada, where user numbers had declined in the second half of 2020.
The company has warned that users would likely spend less time on its apps as coronavirus restrictions are lifted, but Snap’s report suggests people are still highly engaged with social media, said Ronald Josey, an analyst at JMP Securities. He said people expanded their online connections during the lockdowns and now that economies are reopening, they are looking to share details about their real-world experiences.
“I don’t see why that would be any different for Facebook,” he said.
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