Facebook’s growth puts Trump in his place

Facebook said revenue jumped 48% to $26.2bln, well above analyst expectations

  
A 3D-printed Facebook logo is seen placed on a keyboard in this illustration taken March 25, 2020.

A 3D-printed Facebook logo is seen placed on a keyboard in this illustration taken March 25, 2020.

REUTERS/Dado Ruvic/Illustration

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

WASHINGTON - Social media has moved on from Donald Trump. Companies from Twitter to Facebook to Alphabet’s YouTube banned the former U.S. president after rioters invaded the U.S. Capitol in January. He – and his followers – were prolific users of the networks. And yet Facebook’s ad revenue jumped in the first quarter and monthly active users didn’t miss a beat. It will take a lot more than a few new platforms and the disappearance of some popular posters to take the mainstream social networks down.

The company run by Mark Zuckerberg on Wednesday said revenue jumped 48% to $26.2 billion, well above analyst expectations. Monthly active users grew by 15% across its platforms. Advertising is strong – the company said ad sales surged by 46%.

That’s in part because Facebook’s reach makes it harder for the masses to quit it. Popular Trump allies including the former president’s son Don Jr. are still active on the network. So are others, like Senator Ted Cruz and conservative pundit Sean Hannity. That has boosted revenue per user by 33% to $9.27.

But it’s also because Facebook has done a good job of diversifying. Analysts estimate roughly 25% of its revenue comes from Instagram, which doesn’t have as much of a political bent. The company also gleans a large amount of its traffic from users looking through posts from friends or giving status updates, according to Statista. Only 6% of Facebook’s content is political.

It may help, too, that both Instagram and Twitter have more users that are Democrats, according to Pew Research. And while Trump was more important to Twitter, with 88 million followers, or more than 45% of the company’s monetizable daily active users, analysts expect Jack Dorsey’s firm will also be fine. They project revenue will grow by 24% in the first quarter to $1 billion when it reports on Thursday, according to Refinitiv.

The conservative version of Twitter, Parler, faced a major setback in January after it was kicked off the Apple and Google app stores, while Amazon.com halted cloud services. The iPhone maker will allow Parler, with 13 million users, back on after making changes. Trump may establish an online network later this year, too. That may moderately increase competition. So far, Facebook has shown that it can just roll with the punches.

CONTEXT NEWS

- Facebook on April 28 reported a 48% increase in 2021 first-quarter revenue to $26.2 billion as ad revenue jumped 46% to $25.4 billion. Analysts expected revenue of $23.7 billion, according to Refinitiv.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe | Editing by Lauren Silva Laughlin and Amanda Gomez) ((gina.chon@thomsonreuters.com; Reuters Messaging: gina.chon.thomsonreuters.com@reuters.net))

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