Facebook caps off 2020 on solid footing, but economic trends will be pivotal this year

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Facebook is facing “significant uncertainty” in 2021

 

Facebook closed out one of the strangest years in recent memory on a positive note thanks to two key economic trends that emerged during the pandemic. Depending on how things play out over the coming months, we could either see more of the same or a slowdown in advertising revenue growth.

For the three-month period ending December 31, 2020, Facebook raked in $28.1 billion in revenue, an increase of 33 percent year over year.

Net income, meanwhile, reached $11.2 billion, up 53 percent from the $7.3 billion generated during the same period a year earlier. Diluted earnings per share were $3.88, a healthy 52 percent gain compared to the $2.56 from the year-ago quarter.

Daily active users reached 1.84 billion on average during December, up 11 percent year over year, while monthly active users hit 2.80 billion by the end of the quarter, representing a 12 percent increase compared to the end of 2019.

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Facebook identified two broad economic trends that may have helped the company during the pandemic: an ongoing shift towards online commerce and a shift in consumer demand towards products and away from services like travel.

“Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth,” said CFO David Wehner.

The executive said Facebook also expects to face significant headwinds with regard to ad targeting in 2021 due to the impact of platform changes, “notably iOS 14,” and the evolving regulatory landscape. With iOS 14 specifically, Wehner said they expect to see an impact starting in the latter portion of the first quarter.

Images courtesy Laura Hutton, Anikei

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