Anti-ad tracking software doesn't affect Facebook's second quarter results "yet"

Anti-ad tracking software doesn't affect Facebook's second quarter results "yet"

24 August 2021Reading time: 3 minutes

Facebook posted a 65 percent year-on-year revenue increase for the second quarter to USD 29 billion. The American social media platform even beat analysts' expectations. Advertising revenue was USD 28.5 billion and profits doubled year-over-year to USD 10.3 billion. For investors, this also resulted in an earnings per share which doubled to USD 3.61. Facebook, which also owns Instagram and WhatsApp in addition to its own similar named platform, saw the number of daily active users increase by 7 percent compared to last year to 1.91 billion.

The increase in advertising revenue was due to an average price increase per ad of 47 percent year-on-year. In addition, 6 percent more ads were sold compared to the second quarter of 2020. Facebook indicates that the advertising prices will also be increased further in the remaining year.

Facebook expects headwinds

As for the outlook for the remainder of 2021, Facebook expects revenue growth to decline. The American tech company indicates that the comparison base with the most impact from Covid-19, will disappear in the coming quarters. More importantly, Apple's recent introduction of anti-ad tracking software is expected to have a negative impact on ad revenue. This means that iPhone users can now refuse Facebook's ads. However, it remains to be seen what the actual effect of this will be for Facebook's primary source of revenue.

Another setback for Facebook concerns the acquisition of the CRM company Kustomer. The European Commission has postponed its investigation into the acquisition until December 15. The Kustomer acquisition would give Facebook the opportunity, amongst others, to expand its business services with a customer service system. This fits in with Facebook's strategy to generate more revenue from its messaging services. However, the European Commission fears that competition within the CRM software market will be distorted as a result and Facebook will become too dominant. For the time being, the takeover of Kustomer by Facebook remains uncertain.

Facebook also caused great unrest among Australian media companies. The social media platform is said to have incorrectly used news items and, thanks to a newly adopted media law, must now pay for the use of news items.

Stock price development

In view of the stock price development, investors do not seem to be verry worried about the above-mentioned developments around Facebook for now. The share price is still 39 percent higher on an annual basis at USD 363.18 at this moment (16.08.2021).

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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23/10/2021 18:52:36