Facebook's Ad Machine to Power Growth; Antitrust, Content Issues Are in Focus
27 Gennaio 2021 - 03:29PM
Dow Jones News
By Sarah E. Needleman
Facebook Inc. is expected to post record revenue for the fourth
quarter as holiday shopping and increased use during the pandemic
are seen by analysts as driving a surge in digital-ad spending.
The social-media giant's earnings report, due Wednesday
afternoon, should reflect an increase in advertisers' efforts to
reach consumers who have been doing more of their shopping online
in response to the health crisis. Analysts forecast Facebook to
post revenue of $26.36 billion, according to FactSet, up from
$21.08 billion in the final quarter of 2019. Facebook's profit is
projected to rise 25% to $9.2 billion, or $3.19 a share.
Still, the parent of Facebook, Instagram and WhatsApp is
grappling with challenges that could pose problems going
forward.
Last month the Federal Trade Commission and 46 states filed
antitrust lawsuits against Facebook, accusing the company of buying
and freezing out small startups to choke competition. Facebook has
disputed claims presented in the lawsuits, describing them as
revisionist history and defended its acquisitions as good for
competition, advertisers and consumers.
The company is also under fire over its decision to indefinitely
ban former President Donald Trump from Facebook and Instagram after
he made posts encouraging protests at the U.S. Capitol that led to
a deadly riot. It recently referred the matter to an independent
committee to determine whether Mr. Trump should be allowed
back.
Facebook's stock has gained less than 2% over the past three
months, compared with a roughly 20% gain in the Nasdaq Composite
Index.
On Wednesday, analysts will be looking for signs of Facebook's
progress to expand its business beyond advertising in areas such as
e-commerce and virtual reality.
Facebook's foray into e-commerce could yield big benefits in the
long run, analysts say. Instagram Shopping and Reels and Facebook
Marketplace could be responsible for $3 billion of additional
revenue for the company this year, according to a recent note from
Morgan Stanley. The note cited a survey that found about a third of
Americans use Shopping and Reels monthly while more than half use
Marketplace.
Facebook will be the first U.S. social-media company to report
earnings for the most recent season. Snap Inc. and Twitter Inc.,
which also deactivated Mr. Trump's accounts, are scheduled to
release their quarterly financial reports next month. With all
three, analysts will be looking for indications of whether banning
the former president has reduced user engagement, though early data
from analytics firms show no substantial changes in daily users or
time spent on the platforms' websites and apps.
Analysts expect Facebook, which ended the third quarter with
1.82 billion daily users and 2.74 billion monthly users, to have
continued growing its user base in the closing months of 2020.
In the third quarter, Facebook's user numbers grew in every
market except in the U.S. and Canada, where the number of daily and
monthly users declined from the second quarter. The company had
warned that users would likely spend less time on the platform as
coronavirus restrictions were lifted.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
January 27, 2021 09:14 ET (14:14 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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