Daily Brief: Apple’s Privacy Changes Could Be The Least Of Facebook’s Problems…

Daily Brief: Apple’s Privacy Changes Could Be The Least Of Facebook’s Problems…

over 2 years ago3 mins

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Facebook announced mixed earnings late on Monday, so the social media giant would really appreciate it if you could just give it a little look-see into every aspect of your life.

What does this mean?

Facebook’s monthly active users rose by just 6% compared to the same time last year, bringing the total to 2.9 billion. That’s not ideal given that the company makes most of its money from selling its users’ attention – nor were Apple’s recent privacy changes, which are making it tricky for advertisers to target the right customers. That might be why Facebook’s revenue climbed by a weaker-than-expected 35%, and why its outlook for this quarter came in below forecasts too.

Facebook MAUs

Still, Facebook’s shares did climb 3%, and there could be a couple of reasons why. For one thing, the impact of Apple’s changes wasn’t exactly news to investors: the writing was on the wall from Snapchat’s disappointing update last week. And for another, Facebook promised to buy $50 billion more of its own shares, which will reduce the number available and push up the value of those left over.

Why should I care?

For markets: Facebook’s problems are just getting started.

Facebook’s got more worries than iOS: the US is toying with the idea of a new agency dedicated to overseeing Big Tech, and regulators are due to reassess whether its acquisition of Instagram and WhatsApp should ever have gone ahead. No surprise, then, that Facebook’s shares had underperformed the wider market by 15% in the three months before the results.

Facebook stock
Source: The Wall Street Journal, FactSet

The bigger picture: Money Toks.

Recent leaks from within Facebook revealed that the number of under 30s using the platform in America is dropping, and that Instagram’s growth among younger users looks like it’s peaked. That’s a big deal: advertisers will ditch the platform in a heartbeat if they think there’s a cooler kid on the block. And there definitely is: the report showed TikTok users are spending twice as much time on the Gen Z favorite as they are on Facebook.

Facebook users

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HSBC’s Results Beat Expectations, And The Bank's Still Putting Its Faith In China

HSBC image

HSBC announced strong quarterly results on Monday, but the British bank thinks its best chance of truly finding itself might still lie in China.

What does this mean?

HSBC, like plenty of other banks, set aside a massive pot of cash to safeguard itself in case borrowers couldn’t pay back their loans last year. But like plenty of other banks, it was feeling confident enough last quarter to inject a substantial portion back into its business: $700 million worth, to be precise. That pushed its profit up 74% compared to the same time last year – way beyond the 23% analysts were expecting.

HSBC profit
Source: Barron’s

There might be more where that came from: global central banks are looking more and more likely to start raising interest rates, which should boost the income HSBC makes on the loans it offers. That’s given the firm a skip in its step: it announced on Monday that it’d be buying back $2 billion worth of its own shares, and said there might be more to come.

Why should I care?

Zooming in: HSBC isn’t giving up on China.

HSBC has been cutting back on its underperforming US and European businesses since the start of the year, and instead putting the money toward its most profitable region: Asia. The bank even admitted on Monday that China is still a big draw, arguing that issues in the country’s property market – we’re looking at you, Evergrande – won’t actually have any long-lasting effects on the world’s second-biggest economy.

Zooming out: But Goldman might be…

Goldman Sachs, meanwhile, said on Monday it’s expecting China’s economic growth to take a hit next year if the government keeps cracking down on once-booming sectors like real estate and tech. And it put its mouth where its money is: the investment banks downgraded its 2022 forecast for China’s economic growth from 5.6% to 5.2%.

Goldman forecast
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