Facebook Shares Rise Toward a Record in Big Jumps in Sales and Advertising Profits

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Shares of Facebook Inc. initially rose 5% in extended trading on Wednesday, to what would be an all-time high if earnings hold up in Thursday’s regular session, after it announced better-than-expected first-quarter results. The social media giant said it earned $ 9.5 billion, or $ 3.30 per share, against expectations of $ 2.35 per share, according to analysts surveyed by FactSet. Facebook FB, revenue of + 1.16% improved 48% to $ 26.2 billion, beating estimates of $ 23.73 billion.

“We had a strong quarter as we helped people stay connected and businesses grow,” Chief Executive Officer Mark Zuckerberg said in a statement announcing the results. “We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas such as virtual and augmented reality, commerce and the creator economy.” Still, Facebook CFO Dave Wehner warned of “headwinds” in the second half of the calendar year. “In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to slow significantly sequentially as we go through periods of increasingly stronger growth,” Wehner said in a statement. “We continue to expect an increase in ad targeting headwinds in 2021 from regulatory and platform changes, in particular the recently released iOS 14.5 update, which we expect to start having an impact in the second quarter. This is factored into our outlook. “Monthly active users, a key barometer of Facebook’s growth globally, improved 10% to 2.85 billion, compared to expectations of 2.86 billion. Facebook like Alphabet Inc. GOOGL, parent of Google, + 2.97% GOOG, + 3.16% and Snap Inc. SNAP, + 2.53% previously, benefited greatly from a wave of online advertising as more small businesses turn to social media. and searches to reach consumers during the pandemic. Advertising, which accounts for nearly all of Facebook’s sales, soared 46% to $ 25.4 billion. Read more: Facebook used the pandemic to build non-ad businesses, while ad money kept pouring in. Not all is easy for Facebook, however. Antitrust and Apple Inc. AAPL, -0.60% pose immediate challenges in very different ways. While the Federal Trade Commission, state attorneys general, and it Federal lawmakers focus on the Instagram and WhatsApp takeovers, changes to Apple’s iOS 14 that require apps to request permission to track people’s online activity compromise Facebook’s advertising business. “We believe investors remain nervous about various overhangs around Facebook, and we expect the biggest headwind, the iOS 14.5 data headwinds, to start to fade and improve the outlook around H1 growth, despite the strictest comparisons, “said Lloyd Walmsley, an analyst at Deutsche Bank, in a statement. April 27 note that it maintained a price target of $ 385. Facebook shares are up 12% so far this year, while the broader SPX index of the S&P 500, -0.08%, has gained 11% in 2021.