Daily Management Review

Facebook announces jump in use of services, revenue growth not expected


Facebook Inc. warned that the spread of coronavirus is negatively affecting its business, despite an unprecedented increase in the use of company services.

The number of messages sent via Facebook services in the countries most seriously affected by coronavirus soared by 50%, while sending video messages more than doubled.

In Italy, where the most stringent restrictions on social contacts were imposed, not counting China, the use of group video chats jumped more than 1000% in one month, Facebook vice presidents Alex Schultz and Jay Parikh, respectively responsible for analytics and engineering, said in a statement.

However, the increased use of Facebook services will not protect it in the face of lower spending on digital advertising by companies around the world, they noted.

"We don’t monetize many of our services, where there is an increase in user engagement, and we have already noticed a weakening of the advertising business in countries that have introduced strict measures to limit the spread of COVID-19 coronavirus infection," they say.

Facebook did not officially revise its earnings forecast, only stating that the coronavirus pandemic "is adversely affecting its business, as well as many others around the world."

A day earlier, Twitter Inc. warned that its financials in the first quarter of 2020 would be worse than expected due to a reduction in advertising costs by the business.

This shows that social networks probably are not able to quickly transform into growing financial user involvement in the context of the global epidemiological crisis.

Facebook shares rose 8.7% on Tuesday. Since the beginning of this year, their value has fallen by 22%.

source: bloomberg.com