By Yasin Ebrahim
Investing.com - Facebook (NASDAQ:FB) jumped in after-hours trade on Thursday after the social media giant reported second-quarter results that topped analysts' forecasts, led by stronger-than-expected user growth.
Facebook shares gained more than 4% in after-hours trade following the report.
Facebook announced earnings per share of $1.8 on revenue of $18.69B. Analysts polled by Investing.com anticipated EPS of $1.39 on revenue of $17.33B.
Daily active users (DAUs) rose 123% to 1.79 billion, above expectations for a rise to 1.75 billion and monthly active users (MAUs) rose 12% to 2.7 billion, above the 2.63 billion expected
"Facebook DAUs and MAUs in the second quarter of 2020 reflect increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about," the company said.
Looking forward, the company said that as lockdown measures ease the number of Facebook DAUs and MAUs were expected to be flat or slightly down in most regions in the third quarter of 2020 compared to the second quarter of 2020.
"In the first three weeks of July, our year-over-year ad revenue growth rate was approximately in-line with our second quarter 2020 year-over-year ad revenue growth rate of 10%," Facebook said. "We expect our full quarter year-over-year ad revenue growth rate for the third quarter of 2020 will be roughly similar to this July performance."
Facebook shares are up 14% from the beginning of the year, still down 6.16% from its 52-week high of $250.05 set on July 13. They are underperforming the Nasdaq 100 which is up 22.7% from the start of the year.
"Amid slowing digital ad market and advertising moratoriums by global brands, the main focus this time is on user engagement and new additions. If the company continues to show strong growth on that front, it can escape any negative reaction hitting its share price from these headwinds.One major strength that distinguishes Facebook from other social media platforms is the power of its revenue stream which is highly diversified where small advertisers make a much bigger contribution to the company’s overall sales. We see FB continuing to take market share of digital ads, and position itself for even faster growth next year and beyond," Investing.com analyst Haris Anwar said.
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