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Why Facebook Stock Jumped 33% in 2020

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What happened

Shares of Facebook (NASDAQ:FB) climbed 33% last year, according to data provided by S&P Global Market Intelligence. The social media titan saw its user base and engagement levels rise during the coronavirus pandemic, as people sought ways to remain in contact with family and friends while staying safe.

So what 

Facebook’s daily active users increased by 12% year over year to 1.8 billion in the third quarter. Across its entire family of apps — which includes Instagram, WhatsApp, and Messenger — the social media giant’s monthly active users rose 14% to a staggering 3.2 billion. 

That helped to drive a 22% jump in revenue to $21.5 billion. Net income, meanwhile, surged 29% to $7.8 billion, or $2.71 per share.

Facebook delivered handsome returns to investors in 2020. Image source: Getty Images.

These gains came despite an industrywide slowdown during the COVID-19 crisis, as many companies pulled back on ad spending in the early stages of the pandemic.

Now what

Facebook is not without challenges. Critics accuse it of not doing its part to halt the spread of misinformation on its apps. Regulators are trying to force it to divest Instagram and WhatsApp, in order to foster greater competition in the social media industry. And some of Facebook’s largest customers staged a temporary boycott of its ad services in the summer to pressure it to do more to combat hate speech on its platform. 

Facebook’s ability to successfully navigate these challenges will determine the direction of its stock price in 2021, and in the years that follow.

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