Facebook, the social media giant behind not only its eponymous platform but picture sharing site Instagram, reported second-quarter earnings this week that defied its many critics. Those critics say Facebook is a privacy nightmare with a bad track record – and that narrative is gaining steam. During this quarter, Facebook received the largest fine ever imposed by the Federal Trade Commission ($5 billion), and announced an antitrust review by the Department of Justice. However, Facebook’s fortunes remain not just intact, but larger than ever, as revenue and earnings shot up over the last three months. That’s down to strength in the company’s lucrative online ad business.
Facebook’s share price has appreciated by 51% so far this year
Source: Yahoo Finance
Facebook posted revenues of $16.9 billion for the quarter – that’s a 28% increase from the year-ago quarter, and a beat against analysts’ expectations of $16.45 billion. The company also showed its strength in regards to earning power, delivering adjusted earnings of $1.99, ahead of the Street’s estimates of $1.90. These figures demonstrate something that investors should rejoice at: Facebook’s network is so powerful that record federal fines and years of negative headlines can’t seem to dent its growth.
The company continued to see its user base grow. In terms of daily active users on its own platform, Facebook now has 1.59 billion. And in terms of the company’s entire family of apps (which includes WhatsApp and Instagram, amongst others), Facebook 2.1 billion active users.
Facebook’s top brass was quick to point out how the company was evolving. Chief operating officer Sheryl Sandberg noted that a key challenge was growing the business while at the same time future proofing it with investments into security and privacy, saying “this quarter shows once again we can do both.”
CEO and founder Mark Zuckerberg spoke to the company’s maturation in reference to the recently announced plans to create its own cryptocurrency. He said that choosing to partner with a number of other players over a longer timeframe highlighted some of the lessons they had learned, and that “Facebook from a few years ago would probably have just shown up and tried to release a product on our own.”
Disclosure
Dominion holds Facebook in its Global Trends Ecommerce Fund.
Author: Theo Leworthy
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