Facebook Weathering Storm

Facebook investments grow in value thanks to exceptional ad sales performance

Facebook was expected by many to report a quarterly income decline, due to the difficult few months the social media brand has had. However, despite being rocked by a series of data-sharing scandals and a fall in user hours, the social networking company is actually reporting a profit rise for the first part of 2018.

This can be largely attributed to the exceptional performance of the advertising sales branch, which has netted $11.8 billion in ad sales during the past four months.

Q1 Rollercoaster For Facebook Shareholders

In January 2018, Facebook issued performance figures which alarmed investors. The statistics showed that time spent by users on the platform had fallen by around 50 million hours per day, prompting share prices to fall by 4%. Despite the worrying results, Facebook remained unconcerned. Pointing to a 47% quarterly revenue rise and an expansion of monetisation opportunities for companies, Facebook predicted that ad sales revenue would continue to rise.

Just four months later, those predictions have been vindicated. It has been a tough time for Facebook, with data scandals around Cambridge Analytica and WhatsApp prompting a public backlash and causing brand confidence to fall.

Facebook’s CEO Mark Zuckerberg was even ordered to appear before Congress, and to give evidence to the UK Parliament, regarding the privacy scandal. However, the social media giant has quickly bounced back, and in April it reported a 62.8% quarterly earnings rise – driven, as predicted, by a 50% boom in ad sales.

Great News For Investors

Despite the #DeleteFacebook campaign and surrounding backlash, Facebook has actually seen very little change in overall user numbers. Fewer hours spent on the platform can be attributed to new content sharing policies, which prevent ‘fake news’ content spreading virally – this has the knock-on effect of reducing video hours watched.

However, engagement remains high, especially in terms of advertising content, and extended trading shares have grown by around 5% overall. Mobile has been a significant factor in growing ad revenue, with this sector now accounting for 91% of all ad revenue generated.

Some were predicted that the social media bubble is about to burst and that the Facebook data scandals would be the final nail in the coffin for the networking giant. However, it doesn’t appear that Facebook is going anywhere anytime soon, and investors can relax knowing that their shares are predicted to keep on growing.

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