What’s Going On Here?

Facebook reported higher-than-expected first-quarter revenue.

What Does This Mean?

• With the world forced to stay home, there wasn’t much else to do but scroll through Facebook and watch Instagram Live’s quarantine concerts. That helped the tech giant clock 10% more monthly active users.
• Still, it hadn’t factored in just how much coronavirus-shy advertisers would curtail their March spending, which landed with a thud: Facebook’s ad revenue in April has essentially been the same.
• It also seems to have lost its knack for keeping costs in check despite all the expense-trimming it’s been doing.

Why Should I Care?

The bigger picture: It all ads up.

• Facebook’s bigger advertisers do still seem to be splashing some cash on the platform, even if their future spending is uncertain, but only 20% of its revenue comes from the top 100 of those.
• It’s Facebook’s smaller customers, then, that might be a cause for concern: SMEs are among the worst hit by the pandemic, and while the economy will eventually recover, there’s no guarantee those firms will too.

For markets: What a relief rally.

• Most investors were braced for harrowing updates for companies reliant on advertising, like Facebook, Snapchat-owner Snap, and Google-parent Alphabet.
• Perhaps the reality wasn’t as bad as they thought, because Snap, Alphabet, and now Facebook’s shares all shot up after their respective updates.

Content source: Finimize. (2020) U Up?. Available at: https://www.finimize.com/wp/news/u-up/ [Accessed on Apr 30, 2020]