Stock of the week: Facebook makes CEO Mark Zuckerberg $8 billion in just one week!
It has been a momentous week for Facebook CEO Mark Zuckerberg who adds $8 billion to his overall wealth following the social media giant’s Q1 earnings.
Facebook (FB), the grandfather of social media platforms, continues to rake in billions of dollars each year. Despite being 17 years old, the platform is not only growing in popularity but revenue too; It has been a momentous week for Facebook CEO Mark Zuckerberg who adds $8 billion to his overall wealth following the social media giant’s Q1 earnings.
We look at Facebook’s Q1 performance and share ways for you to invest in the company.
Facebook earns billions in Q1
Facebook reported its Q1 FY 2021 earnings earlier in April and its results dramatically beat analysts’ expectations. The social media giant reports earning $26.1 billion in first-quarter revenue, 48% higher than last year. Its results helped propel its stock by 7.3% on April 29, a record high.
Investors in FB are smiling as its earnings per share rose 93%, beating estimates. Since 2020, Facebook’s shares have provided a return of 67.9%, placing it well above the S&P 500’s total return of 46.1%.
Facebook founder and CEO Mark Zuckerberg said: “We had a strong quarter as we helped people stay connected and businesses grow.
“We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas like augmented and virtual reality, commerce, and the creator economy.”
Facebook Q1 highlights:
Revenue: $26.17 billion vs. $23.67 billion forecast
Earnings: $3.30 per share vs. $2.37 per share
Monthly active users (MAUs): 2.85 billion vs. 2.86 billion
More users, increase in ad prices
Revenue is not the only sector that is growing; Facebook’s monthly active users (MAUs) are 2.85 billion, an increase of 10% compared to the same period in 2020. MAU’s are critical to the platform’s success; the company generates revenue through ads based on the strength of MAU. The bigger its user base the more it can market its platform to publishers and companies. The company attributes its huge revenue growth to a 30% increase in its average price per ad, as well as a 12% increase in the number of ads delivered to users.
Facebook CFO, Dave Wehner, said: “We are pleased with the strength of our advertising revenue growth in the first quarter of 2021, which was driven by a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered.
“We expect that advertising revenue growth will continue to be primarily driven by price during the rest of 2021.”
Facebook performance: April 26 – 30 2021
Facebook performance YTD
Facebook outlook for 2021 – Facing regulatory and platform changes
Wehner said: “We expect second-quarter 2021 year-over-year total revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter of 2021 as we lap slower growth related to the pandemic during the second quarter of 2020.
“In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to significantly decelerate sequentially as we lap periods of increasingly strong growth.
“We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently launched iOS 14.5 update, which we expect to begin having an impact in the second quarter. This is factored into our outlook.
“There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments, and like companies across a wide range of industries, we are closely monitoring the potential impact on our European operations as these developments progress.”
Advice for buying tech stocks
Buying into a big tech company such as the ones mentioned in this article can be incredibly appealing. Technology’s biggest strength is also its biggest weakness – it is forever changing. Historically, the tech sector can offer booms (as was the case earlier in 2021) and disastrous drops (such as the dot-com crash of 2000). Tech companies can skyrocket and plunge with the times.
If you are interested in investing in your favourite technology company, you need to ask yourself the following:
- Do you understand how the company works?
- Does it have a competitive advantage over rivals?
- Can you trust the management or parent company?
- Is it growing?
If you answer YES to all these questions you might have spotted a great company to buy some shares in.
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