Facebook stock soared as much as 10% amidst the coronavirus pandemic. After experiencing a decline in ad revenue, business manifested stability.
The company's shares increased as much as 10% in after-hours trading on Wednesday. After announcing its first-quarter results and slower ad revenue, the social media platform reported that it showed some stability during the first few weeks of April and bolstered Facebook stock.
The report from Facebook shows:
- Earnings (EPS): $1.71
- Revenue: $17.74 billion
- Daily active users (DAUs): 1.73 billion
- Monthly active users (MAUs): 2.6 billion
- Average revenue per user (ARPU): $6.95
According to a survey from Refinitiv, analysts predicted $1.75 in earnings per share and $17.41 billion in revenue for the first quarter.
However, the comparison of the analysts' view and Facebook's standing is not ideal given the impact of the coronavirus pandemic on economies worldwide.
Coronavirus impact on economy
Facebook CEO Mark Zuckerberg expressed his concern on how long the coronavirus outbreak would ruin the economy.
“While there are massive societal costs from the current shelter-in-place restrictions, I worry that re-opening certain places too quickly before inaction rates have been reduced to very minimal levels will almost guarantee future outbreaks and worse longer-term health and economic outcomes,” Zuckerberg said during the company’s earnings call.
Facebook reported signs of stabilization after an initial decline in advertising revenue in March due to COVID-19.
The company describes early data for April as more promising. This is also happening to Google with its own advertising business. However, CFO David Wehner remains on his toes about the second quarter results.
“We know economists are calling broadly for a GDP contraction in Q2 that’s pretty substantial globally,” Wehner told CNBC’s “Closing Bell.”
“...advertising tends to be very sensitive to the macroeconomic climate. We really have a very cautious outlook on how things are going to develop," he stressed.
“We’re not immune from this crisis,” he added.
Moreover, the company’s revenue reached $17.74 billion. This is a nearly 18% increase from the $15.08 billion the company recorded in the first quarter of 2019.
Facebook pointed out that it now has 2.99 billion monthly users across its family of apps, compared to 2.89 billion in the previous quarter. The metric assesses the total user base on Facebook, Instagram, Messenger and WhatsApp.
Facebook’s user base in the US and Canada soared to 195 million daily active users from 190 million a quarter earlier. The European Facebook users rose to 305 million from 294 million daily active users in the prior quarter.
Live streaming
Zuckerberg stressed that Facebook now has 800 million daily active account who use Facebook and Instagram livestreams.
“Because no one is planning physical events right now, live streaming has become the primary venue for many events,” Zuckerberg said.
Wehner says expectations on Facebook capital expenditures for 2020 range from $14 billion to $16 billion. This is a lower than the original projection of $17 billion to $19 billion.
“I’ve always believed that in times of economic downturn the right thing to do is to keep investing and building the future,” Zuckerberg said.
Zuckeberg said that their investment in Jio Platforms echoes the company’s JioMart strategy. They aim to attract millions of small businesses online, communicating and processing payments through WhatsApp.
“That’s a great, very large example of how we can wire up and help small businesses in the country where we have the largest WhatsApp community,” he said.
“But certainly all the products and technology that we’re building to enable that partnership are going to be things we’re going to want to do around the world.”
