Facebook beats earnings expectations, but warns of significant growth slowdown

Facebook is set to report its second-quarter earnings after market close on Wednesday.

Here’s what Wall Street is expecting:

• Earnings: $3.03 per share, adjusted, as expected by analysts, according to Refinitiv.
• Revenue: $27.89 billion as expected by analysts, according to Refinitiv.
• Daily active users (DAUs): 1.91 billion as expected by analysts, according to StreetAccount.
• Monthly active users (MAUs): 2.91 billion as expected by analysts, according to StreetAccount.
• Average revenue per user (ARPU): $9.66 as expected by analysts, according to StreetAccount.

Analysts are expecting 49% revenue growth, which would represent the fastest revenue growth in three years as the company compares results against the first full quarter of impact from the coronavirus, which brought the slowest growth since Facebook went public in 2012.

This quarter, analysts and shareholders will be looking to see just how much Apple’s iOS 14.5 update impacted Facebook’s advertising business. The update allows iPhone and iPad users to limit companies from tracking their device’s activity. This makes it difficult for companies like Facebook to target users with personalized ads. 

Already, Snap and Twitter have navigated the challenges of Apple’s iOS 14.5 update, which gives people more control over apps that want to track them, without much trouble. Both companies did warn that the long-term impacts of iOS 14.5 remain to be seen, but so far, the early returns have been promising.

Facebook also had some run-ins with Washington during the quarter. A federal court dismissed an antitrust complaint from the Federal Trade Commission against the company, along with a separate case brought by 48 state attorneys general. The FTC has until Aug. 19 to change its complaint, and the group of states said Wednesday it will fight the court’s decision.

However, Facebook came under the scrutiny of the Biden administration earlier this month when the Biden administration scolded the social-media company for not doing enough to combat misinformation on its services that discourage people from taking Covid-19 vaccines. At one point, President Joe Biden said “they’re killing people” in regard to misinformation on Facebook.

Facebook shares are up about 37% since the start of the year. The S&P 500 index has risen 17% over the same period.

Executives will discuss the results on a conference call starting at 5 p.m. ET.

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