Facebook, Inc. (FB) Crushes Earnings, Stock Soars
Facebook, Inc. (Nasdaq: FB) reported first-quarter earnings after the closing bell on Wednesday afternoon, crushing both revenue and earnings estimates. FB stock quickly rose 5 percent in after-hours trading.
Going into the report, Facebook shares had lost 9.5 percent year-to-date and were up less than 10 percent in the last year.
Facebook earnings: Q1 by the numbers. In a first-quarter for which many investors were likely bracing themselves for, rather than greedily anticipating great numbers, Facebook blew it out.
[Read: Another Twitter Earnings Beat Reassures Investors.]
This is unabashedly great news for shareholders: Revenue came in at $11.97 billion, up 49 percent over year and far better than the $11.41 billion analysts expected.
FB stock also posted earnings per share of $1.69, up 62.5 percent year-over-year and well above the $1.35 analysts were expecting.
The company also announced an additional $9 billion stock buyback plan and announced solid user growth. Monthly active users rose 13 percent year over year to 2.2 billion, while daily active users also ticked up 13 percent to 1.45 billion.
To emphasize how wholly FB relies on the mobile ecosystem, 91 percent of all advertising revenue came from mobile.
Data and privacy: The cloud hanging over FB. Obviously, Facebook wasn't the most popular stock going into its earnings report on Wednesday. The recent revelations that upwards of 80 million Facebook users had their user information improperly accessed by Cambridge Analytica in 2015 and 2016 -- and that that information was used to target political ads towards users in an effort to influence 2016 elections -- is a situation that can generously be termed "bad news bears".
Not only was CEO Mark Zuckerberg summoned before Congress and grilled on national television, but there could be additional regulatory scrutiny for FB due to the breach, and most importantly for the stock, the scandal could change user behavior.
"In the near term, investors are seeing a direct correlation between data privacy and Facebook's rapidly descending stock price," says Chris Belli, vice president of marketing and business development at Studio Science.
"Ensuring user consent and awareness is increasingly critical for Facebook to restore investor confidence, particularly with data privacy legislation looming in the U.K. and as U.S. legislators continue to digest Zuckerberg's recent testimony," Belli says.
Going forward. FB has certainly seen better days, but the fact is that this remains a company growing at light speed that seemingly can't be stopped. Ironically, the social network has social and cultural challenges of its own to navigate if it wants to remain popular with the public, but it doesn't seem to have difficulty recruiting talent, with its headcount rising 48 percent year-over-year.
A headcount of quality engineers in Silicon Valley is sort of like a biotech company's pipeline, so it's great for Facebook shareholders to see the dominant social network still has the ability to recruit heavily, and hopefully move on from its embarrassing data scandal.
[See: 7 of the Best Stocks to Buy for 2018.]
All-in-all, there's a lot to "like" about Facebook earnings to kick off 2018.
John Divine is an investing reporter for U.S. News & World Report, where he covers financial markets and the economy, with a focus on individual stock analysis. He has been an investor himself for over 10 years, and has been writing professionally about stocks and investing for the last five years. He previously wrote about the stock market for The Motley Fool and InvestorPlace, and his work has appeared on Yahoo! Finance, MSN Money, and AOL DailyFinance. He graduated from Appalachian State University in 2011 with a bachelor's degree in finance and banking. At Appalachian, he was a member of the Bowden Investment Group, a team of students that ran a real-money portfolio worth over $100,000. You can follow him on Twitter or give him the Tip of the Century at jdivine@usnews.com.
