Social Media

Growth of Snap reveals Facebook’s fallibility

Reuters San Francisco | Updated on October 21, 2020 Published on October 21, 2020

Facebook boycotts, TikTok ban have helped boost disappearing-message app’s daily active users

Facebook’s Mark Zuckerberg might have downplayed the boycott that fell upon his $745-billion platform this summer. But Snap’s earnings have something else to say about it. The $42- billion disappearing-message app posted revenue growth of a whopping 52 per cent in the third quarter compared to the same quarter last year. Part of that may have been thanks to advertisers jumping ship from Facebook.

Following civil rights protests, activist groups called for an ad boycott of Zuckerberg’s platform that took off in July, saying that the company didn’t do enough to stop racist and inflammatory content. Zuckerberg held a meeting with leaders, but it was after several big companies such as Unilever and Ford Motor had already pulled ads. He later downplayed the problem, saying that big companies don’t account for a lot of the company’s top line.

TikTok ban

A US government order banning TikTok, the other social media favourite among younger generations, might have helped boost Snap’s daily active users, which grew by 18 per cent to 249 million in the quarter. But Snap specifically alluded that the Facebook boycotts opened up opportunities, “as companies reviewed their ad spending,” Chief Business Officer Jeremi Gorman said. Snap’s shares were up by nearly 20 per cent in after-hours trading, which amounts to about an $8-billion gain in market value.

Also read: Irish regulator probes Facebook’s handling of children’s data on Instagram

Overall, Snap’s revenue grew to $679 million, beating analyst estimates. While a big increase for the company, its a drop in the bucket for Facebook, which is set to take some $80 billion in revenue this year, according to Refinitiv. And yet it shows that a little bit of pushing can move the needle, even for a giant. Perhaps Facebook isnt infallible, after all.

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Published on October 21, 2020
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