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Facebook likely to see weaker advertising revenue due to coronavirus outbreak

The warning comes despite the social media company seeing increased traffic on its messaging apps as people ride out social distancing

apps on background
Facebook owns popular messaging apps Messenger and WhatsApp

Facebook Inc (NASDAQ:FB) said advertising revenue is likely to be impacted by the ongoing coronavirus pandemic, according to a blog post from the social networking behemoth on Tuesday evening.

The company said it is seeing “weakening” in its advertising business in countries that are taking severe actions to limit the spread of the virus.

Vice president analytics Alex Schultz and vice president of engineering Jay Parikh, who authored the post, said that its messaging services like Messenger and WhatsApp are seeing increased traffic as socially isolated people around the globe turn to digital methods to stay in touch with family and friends.

READ: Zuckerberg concedes Facebook should pay more tax in Europe

In many of the hardest-hit countries, total messaging has increased more than 50% over last month’s numbers, according to Schultz and Parikh.

Traffic increased by around 70% in Italy, one of the worst-affected countries.

Group calls with three or more participants soared over 1,000% during the last month, the company reported.

However, impressive traffic numbers won’t be counted on Facebook’s bottom line when it comes to results.

“We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” Schultz and Parikh wrote.

Shares of Facebook dropped 3.7% in Wednesday morning trading to $155.10.

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

Quick facts: Facebook Inc

Price: 274.94 USD

Market: NASDAQ
Market Cap: $783.45 billion

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