Facebook’s Revenue Growth Expected To ‘Decrease Significantly’

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Facebook said on Wednesday that it expects revenue growth to “decrease significantly,” sending Facebook’s shares down 3.5% in extended trading despite strong ad sales.

The tech giant said it expects Apple’s recent update to its iOS operating system to affect its ability to display ads, which will impact ad revenue in the third quarter. Apple’s privacy changes make it harder for apps to track users and restrict advertiser’s access to valuable data used to target ads.

Monthly active users amounted to 2.90 billion, 7% more than in the same period last year, but narrowly missed analyst forecasts of 2.92 billion and marked the slowest growth rate in the last three years.

Brian Weaser, global president of business intelligence at GroupM, said that all social media companies are forecast to see slower growth in the second half of the year and that it would take clearer warnings about activity in June and July to expect a “meaningful deceleration.”

Facebook’s total revenue, which consists mainly of ad sales, rose 56% to $29.08 billion in the second quarter from $18.69 billion in 2020, beating analysts’ forecasts.

Advertising revenue for the tech giant rose 56% to $28.58 billion in the second quarter that ended June 30, a 47% increase per ad.

Facebook has ramped up its e-commerce initiatives aimed at generating additional revenue and making its ad inventory more significant. The initiative will be critical to how Facebook, which has more than 1 million online “Shops” on its main app and Instagram, can expand its ad business amid the negative impact of Apple’s changes.

The world’s largest social media platform also aims to attract leading social media influencers and their fans, and competes with Alphabet’s YouTube and the short video app TikTok, which recently recorded 3 billion downloads worldwide. Facebook is investing more than $1 billion to support content creators by the end of 2022.

Zuckerberg also announced this week that Facebook, which has invested heavily in virtual reality and augmented reality, is forming a team to work on developing a shared digital world that he hopes will succeed the mobile internet.

For more information, read the original story in Reuters.

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