Facebook Q1 Results - Let’s Get Social

Facebook Q1 Results – Let’s Get Social

While the year 2020 has now become synonymous with chaos and confusion in the markets, one of the biggest shifts which benefitted certain companies was the huge uptick in the use of social media. From news to entertainment, social media has offered millions of people all over the globe a way to connect and communicate amidst the pandemic-induced uncertainty and nationwide lockdowns. Social media platforms like Facebook and Twitter have become integral for people to find information, share their individual situations, and even have fun. But those with a financial eye may wonder how has the year panned out so far for key social media companies that seem to be making headlines on a daily basis. Let’s take a look at two of the biggest platforms, Facebook and Twitter, and how they’ve performed so far in 2021.

Facebook Forges Ahead

If 2020 looked like a great year for Facebook, 2021 has been even better, largely thanks to the rise in spending on digital advertising across the world. This year, Facebook has shattered all earlier predictions with its Q1 earnings report showing that, despite periods of volatility, Facebook is still very much a force to be reckoned with. The earnings reports were so good that Facebook stock leaped ahead by 7% the day after the news broke. To put this into perspective, analysts had predicted that Facebook would clock in at $2.37 per share in earnings on $23.67 billion in revenue, which the company blew out of the water with its actual numbers coming in at $3.30 per share in earnings on $26.17 billion in revenue. The social media behemoth’s revenue rose by a whopping 48% year-on-year, and its net income rose by 94% compared to last year, which was an eye-watering jump from $4.9 billion to $9.5 billion. Facebook had 3.3 billion monthly users across all of its platforms including Instagram, Messenger and Whatsapp, in Q4 of 2020, whereas Q1 of 2021 saw the social media giant top 3.45 billion monthly users. However, Facebook fell slightly short on its daily active user numbers, with FactSet estimating 1.89 billion and Facebook hitting 1.88 billion. It redeemed itself on its revenue per user data, hitting $9.27, which beat the forecasted $8.40. In line with the global increase in digital advertising expenditure, Facebook has reported that the number of ads that it delivers has increased by 12% this year. The social media giant’s performance, couple with its scalable business model and continuous innovation, explain its increase in profitability in a big way this year. Facebook stocks have jumped out of the gates at breakneck speed in 2021 to finish Q1 with an increase of 34.5%, from a price of $245.35 on the 14^th of January, to a closing price of $330.12 by the 29^th of April.

Twitter’s Stuttering Start

While Twitter’s Q1 results weren’t quite of the same magnitude as Facebook’s, the company certainly didn’t perform poorly. This quarter was the first period of time where former President Donald Trump was not on the platform, having been banned in January, which some people think may also have had an impact on Twitter’s growth over the last few years. The social media platform reached 199 million monetizable daily active users, a 20% increase year-on-year, which is nothing to frown at. However, it remains slightly lower than the 200 million that was forecasted by FactSet. Twitter gained 28% on its revenue to total $1.04 billion in the first quarter of 2021, with a 32% rise in total ad revenue to hit $899 million. Chief Financial Officer Ned Segal explained Twitter’s continued improvements by saying, “Advertisers continue to benefit from updated ad formats, improved measurement, and new brand safety controls.” Be that as it may, Twitter stocks didn’t respond as expected, and plunged by 15% after this news was announced. It seems that Twitter was simply overshadowed by Facebook’s strong performance and it showed in the markets. After that, Twitter stocks trading around $49, and then spent a few weeks hovering in the $49.12 to $55.45 region. Near the end of May, Twitter stock rallied to $57.06 to outperform some of its tech peers like Microsoft and Alphabet for the day. However, Twitter remains in a volatile space for 2021, with a stuttering start that has only led to more downs than ups.

Looking Ahead

What’s next for the bustling social media sector of the markets? Facebook is looking to expand more into e-commerce, and with over 1 billion users on Marketplace, the platform stands in good stead for their next challenge around a personalised e-commerce experience. Facebook CEO Mark Zuckerberg has said that the e-commerce division has been in the pipeline, but has been accelerated by the huge shift towards online shopping as a result of the pandemic. As for Twitter, the analysts were predicting a revenue of around $1.06 billion for Q2 of 2021, but Twitter has forecasted its revenue at between $980 million and $1.08 billion. The final numbers could impact Twitters stocks once again, as could Apple’s new privacy changes which may impact the social media platform in the future.