Facebook took Wall Street by surprise at the end of July by casting aside fears of both digital advertising slowdown in sales revenue and user growth. This comes as Google through its parent company, Alphabet, reported its first ever year-on-year decline in sales since it started in 1998, a 2 percent fall for its second quarter, mainly due to a decline in advertising.
This adds up to a drop of $3.6 billion from a year earlier and is being attributed to businesses cutting back on their spending during the Covid-19 pandemic such as travel companies and large consumer brands due to financial insecurity. Even sales growth at the peak of the financial recession in 2009 brought in profits showing a 0.6 increase for the second quarter report.
In contrast, Facebook posted profits up almost by $2 billion from a year earlier to $18.7 billion for its second quarter, though this is a decline of some $0.5 billion profit in comparison to the same quarter in the previous year and an annual growth of 25 percent over the last four quarters. Facebook also attributed the slowdown partly to economic uncertainty but also to larger brands pulling out over a lack of attraction by Facebook in dealing with hate posts.
Facebook did, however, increase the number of its user-base during April, May and June by 14 per cent, including the companies it had previously bought such as WhatsApp and Instagram.
Google on the other hand, took a hit, though did report that sales were becoming more consistent and that there had been strong growth in other divisions such as Google Cloud. It will be interesting to watch how these sectors including self-driving cars, voice assistant and smartphone devises as well as cloud computing perform in future reports.