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Last week Facebook released Q1 results which comfortably beat expectations. Revenues grew by 18% versus this time last year. Expectations were for 13% growth. As we have spoken about before, Facebook user engagement should increase nicely during the global shutdown but advertising spend will drop. Advertising is 98.3% of all their revenues.
Between their 4 platforms which include Facebook, Instagram, Whatsapp and Facebook Messenger, they had 3 billion monthly users. That is just phenomenal. At the end of the quarter they also announced $60bn in cash reserves. This business is incredibly well positioned for what we are facing.
To get a better understanding of where they make their money, take a look at this table. Nearly half comes from the US.
Knowing the US culture, once things start to normalise, businesses will be throwing their products in your faces as quickly and as aggressively as possible. I expect Facebook to be at the forefront of that advertising spend.
As with most of the companies we are covering now, next quarter will be ugly. The same applies for Facebook. But they will easily survive this and will be stronger for it at the end. This is a must have in your portfolios.