Facebook users are either very naive or just not easily phased. They helped the social media giant set revenue records during the last quarter when it was plagued by data breaches and privacy concerns.
Not only did the seemingly-embattled media behemoth report record earnings, but it also reported a significant increase in user growth.
Facebook Stock Shrugs off Privacy Concerns
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Users were undeterred by the data breaches Facebook was forced to admit had occurred. Businesses who collectively spend billions of dollars advertising on the social media service were also undeterred as they continued to plow funds into buying ads on the platform. This helped propel Facebook’s earnings to record levels throughout 2018.
For the fourth quarter, Facebook reported pulling in $7 billion in revenue, which means it achieved a year-over-year growth rate of about 30%. Q4 2018 revenues rose over the previous quarter by $4 billion.
All this growth came as the company was defending several allegations about its users’ data and privacy not being completely protected.
Breaking Down Facebook’s Wealth
Facebook’s daily active users for December 2018 were up 9% year-over-year to 1.52 billion.
Monthly active users were also up 9% for the quarter to 2.32 billion.
Mobile advertising revenue was up over Q4 2017 figures. Money from mobile ads in Q4 2018 accounted for roughly 93% of all ad revenue compared to 89% reported for Q4 2017.
On the earnings report news, Facebook’s stock price rose almost 12% to about $168 a share.
Before reporting its earnings, Facebook had warned that its revenue growth was slowing. Since that warning in July 2018, the company’s stock was down about 34%.
At the time of writing, FB shares were pacing for the best day since Jan. 2016.
Privacy Issues Be Damned, Users Not Phased
CEO Mark Zuckerberg has vehemently denied accusations that Facebook sells user data. On that same note, he has conceded that the company stores substantial amounts of private user data to use for advertising purposes. He also claims this data serves other functions, such as cybersecurity and fraud detection.
The fact that Facebook saw its user base rise significantly during the last quarter shows the social media giant’s grip on the space and users. More people used it despite the constant revelations about data breaches and privacy concerns.
Perhaps the most damning revelation came from the Cambridge Analytica breach, in which the firm was found to have misused Facebook’s subscribers’ data. Interestingly, Cambridge Analytica, a British data analytics company, was planning to raise as much as $30 million by issuing a new cryptocurrency through an ICO before it got swept up in the data scandal.
Many thought the reveal of the Cambridge Analytica debacle would cause a mass exodus of Facebook users. Their leaving would result in businesses decreasing their ad dollars for the company, the theory went. However, neither scenario came true. Advertisers are still using the platform because users aren’t leaving in droves.
It’s A Family Affair
Facebook boasts that more than two billion people use at least one product from its family of services, which includes Instagram, WhatsApp, and Messenger, on a daily basis.
Even so, Facebook has experienced a decline in users in the sought after 18 to 24 age group. This age group is spending about 27% less time on the platform.
However, Facebook’s not fretting this decline because these younger people have shifted to other apps in its family of services, especially Instagram. With their attention shifted to other services under its banner, the potential revenue the company stands to gain is palatable.
Consider this: Instagram is projected to see its revenues grow by 60% this year. That compares to Facebook’s revenue growth projection of 17%.
Sky’s The Limit and Facebook’s Poised to Fly
Facebook continues to be a go-to for businesses needing to advertise their goods and services. These advertisers are the company’s bread-and-butter.
While Google is king in the digital advertising arena, Facebook continues to give it a run for its money. Zuckerberg and company have five million advertisers, according to the Wall Street Journal.
Coupled together, Google and Facebook raked in 68 cents of every dollar spent in the U.S. on online advertising. Globally, Facebook, Google, and Alibaba are projected to reap 61% of all digital ad spending this year.
As more people shop online, Facebook and the others will continue to see their digital ad revenue rise. This revenue boost will help the social media firm remain competitive despite the daggers thrown its way.
A Wall Street Journal commenter summed up Facebook’s potential this way.
Advertisers are ignoring the bad news because FB has 20% of the world’s population using it on a regular basis. Its user base is growing, not shrinking as the naysayers want you to believe.
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Last modified: September 23, 2020 12:23 PM