Facebook posts strong Q3 user growth, beating top and bottom line expectations

Daniel Howley
·Technology Editor
·3-min read

Social media giant Facebook (FB) reported its Q3 2020 earnings after the closing bell on Thursday, following up solid performances from Snap (SNAP) and Pinterest (PINS), with a big win of its own.

Here are the most important numbers from the report compared to what analysts were expecting, as compiled by Bloomberg.

  • Revenue: $21.47 billion versus $19.84 billion expected

  • Earnings per share: $2.71 versus $1.91 expected

  • Monthly active users: 2.74 billion versus 2.70 billion expected

  • Daily active users: 1.82 billion versus 1.78 billion expected

The company’s stock was down about 1% following the report.

Other tech giants also reported earnings on Thursday, including Amazon, Apple, and Google.

Facebook’s earnings follow reports from Snap (SNAP) and Pinterest (PINS), both of which posted strong user and revenue growth. That, naturally, had investors hyped for Facebook, which is one of the top players in online advertising alongside Google (GOOG, GOOGL).

Facebook saw 12% growth in both daily and monthly active users across its platforms year over year, as consumers around the world spent more time online due to the coronavirus pandemic. The company saw 22% growth in advertising revenue for the quarter, year over year, to over $21 billion.

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Q4, however, could be even better, according to James Lee, managing director of Mizuho Securities.

“Heading into 4Q, we expect growth trends to be even stronger than 3Q due to robust demand for holiday shopping and incremental growth from political advertising, which could add about a few points of revenue growth rate to FB,” Lee wrote in a recent research note.

BofA Global Research’s Justin Post says Facebook could also see long-term benefits from growth areas like on-platform retail sales, as well as other efforts.

“We continue to see several under-monetized and under-valued FB assets (Messenger, WhatsApp, Watch) and material e-commerce growth opportunities,” Post wrote in a research note.

Facebook has been mired in more controversy than usual as of late. The firm faced an advertiser boycott as a result of the Stop Hate for Profit campaign seeking to stop the rise of hate speech on social media platforms, and CEO Mark Zuckerberg was called to sit before the House Judiciary Committee to answer accusations that the social network functions as an illegal monopoly.

The CEO was also called to testify in front of the Senate Commerce Committee this week to discuss Section 230 of the Communications Decency Act, which grants tech companies broad immunity for third-party content posted on their sites.

Still, with investigators continuing to probe Facebook, and The New York Times reporting that the Federal Trade Commission will soon decide on whether to proceed with an antitrust lawsuit, clouds could soon be gathering over the social network.

Got a tip? Email Daniel Howley at dhowley@yahoofinance.com over via encrypted mail at danielphowley@protonmail.com, and follow him on Twitter at @DanielHowley.

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