What’s Going On Here?

Facebook posted better-than-expected second-quarter results, and investors liked it: its stock initially rose 3%.

What Does This Mean?

• Facebook’s monthly active users were up 8% last year – the same rate as in the company’s first-quarter – which, given investors had been expecting growth to slow, likely helped it exceed quarterly revenue forecasts.
• Despite Facebook’s costs continuing to rise 66% higher than a year ago  – the company’s profit beat expectations too, excluding fines.
• Again, Facebook almost never misses profit estimates: perhaps because it consistently spends less than it says it will.

Why Should I Care?

The bigger picture: Fine by Facebook.

• On Wednesday, Facebook agreed to cough up a record $5 billion fine in the Cambridge Analytica scandal – and CEO Mark Zuckerberg agreed to give up sole control of privacy decision–making. The advertising giant should take this in its stride, having already put $3 billion aside.
• But Facebook might still lose its footing:
  • The US government announced an investigation into its dominance in several areas, including social media; and
  • US lawmakers don’t appear to be huge fans of its proposed digital currency either.

For you personally: Regulators are coming out to bat for privacy.

• Between Instagram, WhatsApp, and the old blue wasteland, Facebook already knows a lot about who and what you like – and with Libra, it could soon know what you do with your money too. This could line Facebook’s pockets with higher revenues from advertisers.
• But on the other side of the digital coin are the potential limits authorities might place on the company.
  • Regulations introduced last year now allow Europeans to take more control of their data and how it’s used, and
  • US regulators may be about to follow suit.

Content source: Finimize. (2019). Saving Face. Available from: https://www.finimize.com/wp/news/saving-face/ [Accessed 25 July 2019]