Seeking Alpha
, Twitter (70 clicks)
Long/short equity, value, contrarian, research analyst
Profile| Send Message|
( followers)  

Summary

  • Facebook beat earnings with $2.91 billion and EPS of $0.42 per share, compared to estimates of $2.81 billion and EPS estimates of $0.32.
  • Facebook is clearly still in hyper-growth mode and is still a value at these levels.
  • I anticipated an earnings beat in my previous article.

Wednesday after hours, Facebook (NASDAQ:FB) announced stellar earnings. The company beat on both the top line and bottom line, as well as delivering incredible user growth and engagement rates. Overall, revenue in the quarter was $2.91 billion, which is an increase of 61% y/y. Further, crucial mobile advertising revenue shifted to represent 62% of total revenue, up from 41% a year prior.

In my previous article, I explained that Facebook would benefit greatly from the World Cup and would beat earnings estimates. Daily active users increased 19% y/y, mobile daily active users increased a staggering 39% y/y, monthly active users increased 14% y/y, and mobile monthly active users increased 31% y/y. New initiatives such as the save button, that was just launched, will help sustain those elevated engagement rates.

Facebook is clearly an incredible company with a bright future. A number of novel initiatives will allow it to further galvanize growth. Monetization has not even come from Instagram or Whatsapp and once that becomes accretive, growth will further accelerate. Moreover, after the earnings release, COO Sheryl Sandberg announced that Facebook has an astounding 1.5 million advertisers on the platform. With such high engagement and the ability to directly target ads, Facebook is poised for future success. Facebook is a prudent long-term addition to a portfolio.

Source: Update: Facebook Delivers Stellar Earnings