Facebook weathers first stage of COVID-19

Facebook weathers first stage of pandemic, sees murky outlook

Facebook on Wednesday reported a jump in usage and higher revenues as the global pandemic unfolded, sparking a rally in shares even as the social network warned of an uncertain outlook.

Facebook shares jumped some 10 per cent after the leading social network reported a profit of $4.9 billion on revenue that grew 17 per cent to $17.4 billion during the first three months of this year.

Ranks of monthly active users grew 10 per cent to 2.6 billion for its core social network, and the user count for its "family" of apps including Instagram and WhatsApp neared three billion.

Facebook warned of "unprecedented uncertainty" about the future of its business as a result of the COVID-19 pandemic.

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"The impact on our business has been significant and I remain very concerned that this health emergency and therefore the economic fallout will last longer than people are currently anticipating," chief and co-founder Mark Zuckerberg told analysts.

Facebook said it saw "significant reduction" in demand for advertising as well as a drop in ad prices during the last three weeks of the quarter, according to the earnings report.

"After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April," Facebook said.

Ad revenue -- the bulk of Facebook revenues -- has been relatively flat in April compared to the same period last year, according to the social network.

The California tech giant offered no specific outlook for the current quarter because of the rapidly shifting conditions.

"The April trends reflect weakness across all of our user geographies as most of our major countries have had some sort of shelter-in-place guidelines in effect," Facebook said.

The California-based company noted that it expects to give back some of the gain in use as lockdown restrictions ease.

Analyst Debra Williamson of eMarketer said Facebook is likely to see "a much more challenging quarter" in the period that began in April, with advertising growth in doubt due to global economic conditions.

"Some countries will be open for business sooner than others, and ad spending will start to rise there, but other countries will remain largely on lockdown into May and possibly beyond," she said.

This could make it "incredibly difficult for a company like Facebook to get its ad sales momentum back," Williamson said.

Like other big tech firms, Facebook's role during the crisis has become more prominent as it helps people connect and seeks to weed out misinformation about the virus pandemic.

It has helped authorities track the spread of the disease by providing data for a virus "heat map" using Facebook's vast data.

The social network has also created a "journalism relief fund" to help news organizations hurting from the economic slump.

Facebook recently unveiled a new video chat service with virtual "rooms" where people can pop in to visit friends, aiming at users turning to the popular Zoom platform during the pandemic.

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