Facebook (NASDAQ: FB) Q2 2022 Earnings – A Strong Performance Driven by Strength in Ad Revenue

Facebook is a veritable greenbacks generation machine, leveraging big information analytics to deliver targeted ads. However, from the ongoing ads boycott to multiple antitrust investigations, the company seems to be stumbling from one crisis to some other. In this backdrop, Facebook has come up under a fresh spotlight today as information technology announces its earnings for the second quarter of 2020.

Facebook Q2 2020 Earnings Scorecard

For the 3 months that concluded on the 30th of June 2020, Facebook reported $18.69 billion in revenue, registering an increase of 12.45 percent relative to the comparable quarter last yr.

(All figures are in billions of dollars)

Facebook reported that its Daily Active Users (DAUs) increased by 12 percent year-over-year to 1.79 billion. Moreover, the social media giant's Monthly Active Users (MAUs) increased by 12 pct year-over-year to two.seven billion.

(All figures are in billions)

Finally, Facebook reported $1.80 in EPS, beating consensus expectations by $0.42.

(All figures are in dollars)

Given the significant uncertainties involved in projecting future growth, Facebook did not provide a numerical revenue guidance, noting that:

"Nosotros wait our full quarter year-over-year ad acquirement growth charge per unit for the 3rd quarter of 2020 will be roughly like to this July performance. In that location are several factors contributing to this outlook, including:

First, continued macroeconomic uncertainty, including the pace of recovery and the prospects for additional economic stimulus;
2d, our expectation that some of the recent surge in community date will normalize equally regions reopen;
Tertiary, the impact from sure advertisers pausing spend on our platforms related to the current boycott, which is reflected in our July trends; and
Lastly, headwinds related to advertising targeting and measurement, including the impact of regulation, such every bit the California Consumer Privacy Act, as well as headwinds from expected changes to mobile operating platforms, which nosotros conceptualize will be increasingly pregnant as the year progresses."

Regarding active users, the social media behemothic stated:

"We expect the number of Facebook DAUs and MAUs to be flat or slightly down in most regions in the third quarter of 2020 compared to the 2d quarter of 2020."

The stock has reacted positively to Facebook's Q2 2020 earnings, registering a gain of 6 percent in the after-hours trading. Year to date, the stock is upwards over 11 percent.

As mentioned earlier, a considerable number of advertisers are shunning Facebook due to its content moderation policies. This boycott campaign has been prompted by concerns regarding the supposedly lax way with which the social media giant tackles misinformation and hate speech. The motility was initiated by the advancement group 'Stop Hate for Profit' and has gained the support of major companies such as Starbucks (NASDAQ:SBUX), Microsoft (NASDAQ:MSFT), Proctor & Gamble (NYSE:PG), Honda America, Levi Strauss (NYSE:LEVI), Patagonia, etc.

It should be noted though that a large bulk of these advertisers but paused their advertisement on Facebook for a catamenia of 1 month, leading many to conclude that the cumulative effect of this campaign on Facebook'southward finances would merely be transitory. In any case, the boycott officially began from the 1st of July. Consequently, its impact - if any - will only be revealed in the third quarter. Withal, the tech titan seems to be responding to the irresolute winds. According to a Bloomberg report, Facebook may ban all political ads in the runup to the November U.South. Presidential elections.

Despite the growing number of challenges to Facebook's dominance, a number of analysts remain bullish regarding its prospects. As an illustration, Jeffries raised its target for the social media giant'due south stock price to $285 from $250 on the 13th of July due to "healthier-than-expected ad spend" for May and June. The impending launch of Instagram'south Reels feature in the U.S., UK, and 50 other countries is simply adding to the overall optimism. As a refresher, the characteristic allows users to record xv-2d videos with music and audio clips and is intended to compete against the wildly popular TikTok app.