What happened
Shares of Facebook (META 0.32%) retreated on Thursday after the social media specialist reported second-quarter results and warned of a growth slowdown later this year. As of 3 p.m. EDT, Facebook stock was down more than 4%.
So what
Facebook's revenue surged 56% year over year to $29.1 billion, fueled by strong growth in its digital advertising services. Its net income, in turn, more than doubled to $10.4 billion, or $3.61 per share. That was well ahead of Wall Street's estimates for EPS of $3.04.
Facebook's shares pulled back on Thursday. Image source: Getty Images.
Investors, however, appeared to focus on Facebook's warning that Apple's privacy-focused updates to its iOS software and other regulatory changes would take a toll on Facebook's results later in the year. "In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth," the company said in its earnings release.
Now what
With user engagement levels on its social media networks up sharply during the pandemic, marketers were willing to pay 47% more per ad on average to advertise on Facebook's platform in the second quarter. But Apple's new privacy policies are expected to weaken Facebook's ad-targeting capabilities. These changes might lessen the value Facebook can provide to advertisers, which could weigh on the digital ad titan's revenue and profits in the coming quarters.
