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Social media beast Facebook reported second quarter earnings after the close Wednesday which saw the stock slammed 17% after it missed revenue targets. $FB appeared to have shrugged off pressure since the data privacy scandal broke but daily user growth slowed to 11%.



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Facebook Inc. (NASDAQ: $FB) Earnings Missed Revenue After Close Wednesday

 

$1.74 beat $1.72 EPS BUT $13.23 Missed $13.38 billion revenue forecast

Earnings

Facebook second-quarter earnings of $1.74 per share, which topped consensus estimate $1.72 a share on. revenue of $13.23 billion that missed the street estimate of $13.38 billion. Last year in the same quarter, Facebook posted profits of $1.69 a share, on revenue of $12 billion.

Facebook, Inc. Common Stock NASDAQ: $FB

Market Summary > After hours 178.47 −39.03 (-17.70%)

FB User Base June 2018

Highlights

  • Global daily active users (DAUs): 1.47 billion vs. 1.49 billion 
  • North American DAUs: 185 million vs. 185.4 million
  • European DAUs: 279 million vs. 279.4 million
  • Average revenue per user (ARPU): $5.97 vs. $5.95,
  • Comaprisons are according to a StreetAccount and FactSet estimate

FB Earnings Q2 18

 

 

Facebook Q2 Earnings Preview

What Analysts Will Be Watching

Data Privacy

Social media data privacy and Facebook in particular has been a beacon of controversy with many hoping earnings will allow a change of focus. 

It appears that Facebook Chief Executive Mark Zuckerberg's 10 hours of congressional testimony last quarter or so ago has been forgotten in this FOMO mania we call NASDAQ investing. This will help avoid difficult questions, perhaps but doubtful. During the conference call, expect Zuckerberg to again address questions about the impact of the Cambridge Analytica data scandal, which led to the congressional hearings. 

Advertising Revenue Metrics

Advertising accounts for the bulk of Facebook's revenue, growing 39% year over year during the last quarter. Investors will also be watching  for improvements in ad impressions, which grew 8%. Facebook guided for full-year operating expenses to increase 50% to 60%, earnings-per-share growth could decelerate significantly in Q2. 

Continued growth in the user base for the Facebook flagship social media site is a key metric. $FB's monthly active users (MAUs) grew 13% year over year in its most recent quarter. Investors will be expecting growth at least at this speed.

Stifel Nicolaus’s Scott Devitt in a recent note rose his price target on Facebook to $242 from $202. 

"We are incrementally positive on our mega cap U.S. digital advertising names (FB, GOOGL) in the near term, as reasonable valuation, the potential for multiple expansion, and digital advertising growth momentum continues. As reasonable valuation, the potential for multiple expansion, and digital advertising growth momentum continues." He added that his "agency checks indicate continued momentum."

Instagram

With Instagram now Facebook's fourth platform to exceed 1 billion users while launching IGTV. There is much excitment here, Updated user growth or engagement information are expected to show that adoption of the app is accelerating,

Facebook's future growth may well depend on the success of Instagram, as its own user growth is slowing.

Messaging Apps

Facebook's messaging apps with WhatsApp and Messenger users sending a combined 100 billion messages per day, along with 3 billion minutes of video and voice calls last quarter. Investors are expecting monstrous growth as usual.

  • Shares closed Friday at $210.34 in a 52-week range of $147.80 to $211.50. 

  

Facebook First Quarter Earnings Recap

Earnings

Earnings rose 63% to $5 billion or $1.69 per share from $3.1 billion or $1.04 per share a year earlier. Revenues rose 49% to $12 billion both revenues and profit beat market expectations of $1.35 per share and $11.41 billion in revenue

Market Reaction > Facebook, Inc. Common Stock NASDAQ: $FB

  • Market Reaction > After hours 171.60 +11.91 (+7.46%)

Key Metrics

  • Number of daily active users increased 13% to 1.45 billion
  • Around 2.2 billion monthly active users as of March 31, up 13% compared to last year.
  • Facebook said it made an average $5.45 in advertising revenue on each user worldwide in the quarter,
  • FB said it made an average $23.14 on ad sales for each user in the US and Canada.
  • Mobile advertising revenue accounted for 91% of total revenue up from 85% last year.

“Despite facing important challenges, our community and business are off to a strong start in 2018. We are taking a broader view of our responsibility and investing to make sure our services are used for good,” said Facebook CEO Mark Zuckerberg.

 Facebook Q1 2018 earnings

What About Snapchat?

The seeming demise of $SNAP has also helped Facebook's cause. By last June Facebook's Instagram Stories feature had grown to 250 million users which has further undermined its chief competitor, Snapchat $SNAP. This was up from 200 million in mid-April. Snap ended Q117 with 166 million users which was up 36% from the year-ago quarter.

Stories was added in August 2016, is a feature inside Instagram. $FB has in this time copied the most popular features of Snapchat. Instagram has over 700 million monthly users, doubling in just two years.

How pervasive are these internet monsters  in our lives?  A report from Research firm Comscore ranking online hits on mobile devices and computers gives us an idea. The growth of Facebook is a cultural phenomenon, last month $FB reached 2 billion monthly active users, doubling its base in just 4 1/2 years. The Q117 earnings number was 1.94 billion monthly active users.

Unique visitors in June via Comscore

  1. Google 241 million
  2. Facebook 204 million
  3. Yahoo! 186 million
  4. Microsoft 183 million 
  5. Amazon 180 million 

Online advertising Industry Revenue Share via emarketer 

Of a forecast $83 billion revenue in 2017 the market share is expected as 40% Google and 21% Facebook.

From Last Year: Facebook $FB Buys tbh Anonymous App To Compete With $SNAP 

Source: Traderscommunity, Facebook, AlphaStreet 

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