Facebook Quarterly Report: weak forecast and buyback on 50 billion dollars

Social network Facebook reported for the third quarter 2021 of the year. Compared to the same quarter last year:

revenue increased by 35%, to 29 billion dollars;
operating profit increased by 30%, to 10,4 billion;
net profit increased by 17%, to 9,2 billion.

The company reported higher earnings per share, than analysts expected: 3,22 against 3,19 $. But the revenue turned out to be below expectations by about 0,6 billion dollars. For the same reasons, that and Snap.

Content:

iOS, electronic commerce, supply disruptions

Facebook said, that privacy policy, which Apple used in iOS 14, had a negative impact on advertising revenues. The social network can no longer track user preferences and issue relevant advertising.

The company also noted a slowdown in e-commerce growth., as consumers began to return to physical stores.. Supply disruptions and labor shortages have also reduced advertisers' spending..

All this Facebook laid in the forecast for the fourth quarter: the company expects revenue of 31.5-34 billion dollars. Analysts are counting on 34,8 billion.

Last week, Snap announced similar problems.. After the report, the company's shares fell by 27%. But Facebook shares on the postmarket added 2%.

A possible reason for the increase is the announcement of a new share buyback program on 50 billion dollars. For comparison: with 2017 on 2020 Facebook spent a year on buyback 25 billion dollars. IN 2021 year the company has accelerated: The same 25 billion in the first three quarters. Probably, in the future, Facebook plans to buy back its own shares even more aggressively.

Not a social network, and the metaverse

In July, Facebook began assembling a team to work on the "metaverse" – the digital world, where several people can communicate at the same time, work and play. The company wants to diversify advertising revenues and is actively investing in virtual and augmented reality..

According to the head of Facebook Mark Zuckerberg, metaverse will work on virtual reality headsets, game consoles and smartphones: "I hope, if everything going to be good, in the next five years or so we will be considered not a social network., and the company is the developer of the metaverse".

In the next quarter, the company will allocate sales of equipment and software, which belong to the metaverse, in a separate segment — Facebook Reality Labs. Another segment will be called Family of Apps is advertising revenue., which Facebook generates, Instagram, WhatsApp and other services.

Very Hard Drives: Western Digital Review

In the meantime, Facebook's operating segments are called that.: Advertising, a.k.a. "Advertising", and Other, or "Other", which includes sales of Oculus headsets.