Facebook warns rising revenue will slow ‘significantly’
The company believes Apple's new privacy control will hinder its ad revenue
Facebook has issued a warning envisaging its revenue to slow down “significantly” in the second half of 2021.
As relayed in its second-quarter results posted today, the social media giant saw its revenue increase to $29bn (£21bn) in the three months to 30 June from $18.7bn last year, despite its profits doubling to $10.4bn.
Facebook said it had been aided by other businesses targeting consumers with online adverts during the numerous lockdowns.
According to David Wehner, chief financial officer (CFO) at Facebook, the company is predicting “year-on-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth” in the third and fourth quarters of 2021.
Despite this cautionary note, Facebook stocks are up 1.49% today as of 9.57am BST.
In light of this warning from Wehner, Facebook’s founder and CEO, Mark Zuckerberg, appeared to remain focused on the next stage of the company, which he describes as the “metaverse”.
The Facebook CEO said: “I'm excited to see our major initiatives around creators and community, commerce and building the next computing platform coming together to start to bring the vision of the metaverse to life."
The ‘metaverse’ is an online virtual reality (VR) world where people can work, game and communicate in a virtual environment using a VR headset.
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The plan is to transform Facebook from a social media network to a “metaverse company” over the next five years.
On the back of this move, Facebook has acquired Oculus for $2bn as it develops VR products.
The company also stated it expects spending on the development of new products and data centres and servers to be up to $19–$21bn.
Apple’s new privacy controls
Another challenge the company is expecting to face is Apple’s new privacy controls.
The idea behind these rules is to limit advertisers from tracking iPhone users without their knowledge. The company did state, however, that it has factored the iOS updates into its projections for the remainder of the year.
As consumers will have the choice to opt out of being tracked, it makes it harder for firms like Facebook to target adverts, which would dampen its revenue.
Pablo Pescatore, a tech, media and telco analyst at PP Foresight, said: “It is apparent that the Facebook user base is skewed to iOS users and will continue to be negatively impacted from the iOS change.”