The Facebook FB platform, which continues to receive criticism from consumers and politicians, once again reported a strong quarter with both top and bottom line coming in ahead of consensus expectations. Facebook's network effect moat source remains intact demonstrated by user growth, steady engagement, and higher user monetization during the second quarter. Management continues to guide for revenue growth deceleration this year and in 2020. In addition, the firm still expects margin contraction not only due to its additional investments on product development, data security, and content management, but also because of the costs related to Facebook's settlement with the Federal Trade Commission, or FTC. We did not make significant adjustments to our model and are maintaining our $200 per share fair value estimate on wide-moat-rated Facebook. In our view, negative headlines regarding possible legal risks continue to hang over the stock and may limit its upside. With the stock up 44% year-to-date and trading in 3-star territory, we recommend waiting for some margin of safety before investing in this high uncertainty name.
Facebook's second-quarter total revenue increased 28% year over year to $16.9 billion, driven by the growth in user count and more impressions (or ad inventory) sold. The firm ended the quarter with over 2.4 billion monthly active users (up 2% sequentially and 8% from last year) and 1.6 billion daily active users (up 2% sequentially and 8% from last year). Higher growth in daily users is indicative of strong overall user engagement, which normally bodes well for sales of ad inventories.
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