Facebook: Targeted Advertising Faces Danger

Facebook: Targeted Advertising Faces Danger

2021-07-29 • Dikemaskini

What happened?

Facebook presented an earnings report on July 28. The company showed higher than expected results but mentioned that growth rates might slow down in Q3. The social media giant is concerned about Apple Inc.’s new rules which pinch data collection on mobile devices and advertising gains reduction after the pandemic bump. Facebook’s shares price dropped by 5% in the post-market trading session after the announcement.

How can it affect the company?

Investors are concern that Facebook’s sales growth rates might slow as after the pandemic as people will spend less time on phones and laptops. Moreover, the situation gets worse as Apple’s new restrictions on data collection on iPhones prohibit tracking users’ activity and collect data without permission. This novation could put a negative effect on Facebook’s revenue as targeted advertising is a crucial Facebook tool that has given it an edge with large brands and small businesses looking to reach precise groups. According to Brach, which analyses mobile app growth, only 1 out of 4 users allow tracking their activity.

Facebook noticed that new policies in users’ privacy can make incredible damage to the small business sector, which doesn’t have enough resources to spend on broader marketing campaigns.

Plans for future

Chief Executive Officer Mark Zuckerberg said the company will work on the creation of a “metaverse”, a virtual space where people can communicate with each other using social platforms. Oculus, Facebook’s hardware division, last year unveiled Quest 2, an all-in-one virtual reality headset. The company is also building an augmented reality-powered wristband and glasses.

Facebook’s future also contains creating e-commerce tools for small business advertising. The service will allow potential customers to try on products in virtual space.

Those innovations might be able to solve Facebook’s problem with Apple’s restrictions and protect its digital advertising revenue from being reduced.

Technical analyses

4H Chart

FACEBOOKH4.png

US100 4H Chart

US100Daily.png

Facebook is trading at $360 on pre-market, Thursday 29. On the US100 chart, the bearish divergence occurred. Facebook’s stock price correlates with the US100 index as it is one of the biggest companies included in NASDAQ. If NASDAQ drops, the Facebook stock price will follow it. In this case, the price will be heading to $341. At this point, it will be very important for US100 and Facebook to hold 14500 and $341 levels respectively. If they do, the price will fly to an all-time high. Otherwise, there will be a good shot trade opportunity with a potential target of $300.

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