Real-time BATS EXCHANGE - 08/20 04:41:52 pm

Facebook tops expectations

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04/25/2019 | 04:55 pm
Defying skeptics, the social network unveiled better than expected results for the first quarter. However, it faces headwinds from US authorities.

Facebook did it again. The group's sales exceeded expectations, with a 26% jump year-on-year to $15.08 billion. This topped analysts' average estimate of $14.98 billion.

Source: Facebook

On the user side, the number of active users per month reached 2.375 billion people, up from 2,320 in the year-ago quarter. 

Source: Facebook

However, net income is down to $2.43 billion, from $4.99 billion last year. But it surprised with lower than anticipated OPEX growth of 39%, thanks to better-than-expected marketing spend and lower than expected hiring.

Facebook shares gained 3.26% after the closing. Since the beginning of the year, Facebook shares have increased by 39.43%, above the performance of Nasdaq.

Stories continues to be a driver of better than expected monetization and FB highlighted there are now more than 3MM advertisers utilizing the Stories format. “We believe that it is still in the early phases of educating advertisers on how to best use Stories and think that upside to ARPU can be driven by better usage driving higher demand in the auction. However, FB did highlight potential challenges to targeting in the rest of '19 with changes to platforms and other changes to regulation. However, we feel that given FB's scale and investment it will be much better suited to deal with changes than smaller competitors”, said analysts at Jefferies.

A slap on the wrist

But the company is not immune to some challenges. It faces a record fine in the US following the Cambridge Analytica data leakage scandal that took it by storm in March 2018. "In the first quarter, we entered $3 billion, or €2.7 billion related to the Federal Trade Commission's (FTC) investigation into our platform and user data practices. We estimate the cost of this case to be between $3 billion and $5 billion,"  the management said while presenting its results.

This would be by far the largest amount imposed on a technology company by the consumer and competition law authority, and would bring the practices of the US authorities closer to those of the European Union. Although this is merely a slap on the wrist for Facebook: analysts anticipate profits of $22 billion in 2019.
Romain Fournier
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