Facebook Beats Q4 Earnings, Revenue Forecasts But Sees Ad-Targeting Headwinds in 2021

Facebook beat forecasts on both the top and bottom line when the social media giant reported fourth-quarter and full-year earnings after the close on Wednesday, but shares are sliding in extended trade.

Wall Street analysts had expected per-share earnings of $3.22 on revenue of $26.43 billion — Facebook delivered $3.88 a share in earnings on $28.07 billion in revenue.

The company also reported average daily active users of 1.84 billion and average monthly active users of 2.8 billion.

“We believe our business has benefited from two broad economic trends playing out during the pandemic,” said Facebook CFO David Wehner in a statement. “The first is the ongoing shift towards online commerce. The second is the shift in consumer demand towards products and away from services. We believe these shifts provided a tailwind to our advertising business in the second half of 2020 given our strength in product verticals sold via online commerce and our lower exposure to service verticals like travel. Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth.”

But he also noted that the company expects “more significant ad targeting headwinds” in 2021, noting platform changes as well as “the evolving regulatory landscape.”

“There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments, and like other companies in our industry, we are closely monitoring the potential impact on our European operations as these developments progress,” continued the exec.

In the previously reported quarter, Facebook said monthly and daily active users in the U.S. and Canada had decreased slightly, quarter over quarter.

Shares plunged nearly 6% before quickly paring losses in after-hours trading, after dropping around 3.5% during the regular trading session. The stock is well off its highs from last summer, when it broke out past the $300-per-share mark last August.

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