Is Facebook reaching its peak?
I read this headline in an article recently and immediately I was intrigued; particularly with the widely publicised big brand boycotts of social media advertising in the past month.
Surely the behemoth that is Facebook couldn’t be reaching its peak only 16 years after its inception and a mere 8 years after it started to make any money?
Having done some research in a number of areas since however, including some key stats from their Investor Relations report from the first quarter of this year I would conclude that the answer to the question is no. Its user demographics and therefore its future strategy has certainly changed and will need to continue to do so but to say its reached its peak is far fetched.
Below are some key stats to back up my conclusion:
Facebook daily active users (DAUs) – DAUs were 1.73 billion on average for March 2020, an increase of 11% year-over-year.
Facebook monthly active users (MAUs) – MAUs were 2.60 billion as of March 31, 2020, an increase of 10% year-over-year.
Family daily active people (DAP) – DAP was 2.36 billion on average for March 2020, an increase of 12% year-over-year.
Family monthly active people (MAP) – MAP was 2.99 billion as of March 31, 2020, an increase of 11% year-over-year.
For anyone not familiar with the Facebook lingo, Family daily active people (DAP) means:
A daily active person (DAP) is a registered and logged-in user of Facebook, Instagram, Messenger, and/or WhatsApp (collectively, Facebook's “Family” of products) who visited at least one of these Family products through a mobile device application or using a web or mobile browser on a given day. (Source: Investor.FB.com)
Family monthly active people (MAP) is the monthly equivalent of this metric.
Whilst this doesn’t show phenomenal growth by social media standard its still significant given the numbers we’re talking about. According to eMarketer, Facebook’s growth is happening in developing countries where they claim Facebook will gain more than 250 million users between 2019 and 2023 so there is still significant growth potential there.
What has changed significantly are their user demographics.
Edison Research’s Infinite Dial study from early 2019 showed that 62% of U.S. 12–34 year-olds are Facebook users, down from 67% in 2018 and 79% in 2017. This decrease is particularly notable as 35–54 and 55+ age group usage has been constant or have increased.
62% of online Seniors aged 65+ are on Facebook and 72% are between age 50-64
The study hasn’t been updated yet but I would make an educated guess that the 12-34 user group may have decreased further with the explosion of TikTok and Snapchat etc.
So bottom line how has this shift and claimed ‘peak’ affected Facebook’s financials? Not badly at all I would argue…
Revenue of $17.735bn (increase of 18% from the previous year)
Net income of $4.902bn (phenomenal increase of 102%)
Not bad news for their investors either with Diluted earnings per share (EPS) up 101% to $1.71
I’m sure most businesses would like to reach a ‘peak’ and still be increasing revenue at 18% and achieving net revenue increases of 102%.
