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I Predicted Facebook Would Miss Q2 Earnings: Here's What Investors Need To Know For Q3

Aug. 02, 2018 1:05 PM ETMeta Platforms, Inc. (META)139 Comments


  • Q3 earnings will be bumpy for Facebook Inc. as data and revenue from third-party mobile applications and websites begin to erode.
  • The data from Audience Network is more essential than the revenue to Facebook's business model although I place the value of the ad network between $5-$10 billion net to Facebook.
  • User attrition will give investors false confidence in Instagram, as it's the underlying data science and technology, which caused earnings to miss in Q2 and will again in Q3 (source:NASDAQ).
  • Looking for more stock ideas like this one? Get them exclusively at Tech Insider Research. Get started today »

Any information or analysis contained herein and published or referenced elsewhere should be appropriately credited to Beth Kindig of beth.technology

This is a crucial time to point out to investors that my predictions were correct. Last April, I published an in-depth analysis on Seeking Alpha along with predictions for Facebook (FB) stock based off my experience as a technology evangelist. The analysis urged readers to ignore post-Cambridge Analytica hype as Facebook’s quarterly earnings would miss as a result of GDPR. Specifically, I stated the culprit would be revenue and data sources outside of the Facebook “family of apps.” However, with this article, I’d like to explore this point even further and explain with granularity why the issues have only begun and what Facebook isn’t telling you.

From the day I published my prediction, no matter how much Facebook fever ensued, I remembered what Peter Lynch encourages – invest in what you know. As someone who understands technology – specifically mobile advertising (I specialized in this field for 6 years, presented at events on stage, published in the press on the nuances of mobile advertising, etc.), I knew the future for Facebook stock was undeniable and obvious – this company would miss earnings (source for Facebook earnings report: NASDAQ).

Therefore, my first piece of advice is to not continue relying on analysts, hedge funds or press outlets who base their analysis on financial modeling and hearsay. Tech companies are complex, especially as it relates to data science, and it’s unlikely an analyst or hedge fund whose expertise is in finance understands what exactly Facebook does with data and how this impacts average revenue per user (ARPU) or future earnings.

There's more to Facebook than a "family of apps" which is causing confusion in the markets.

Biggest stock drop in history

Audience Network: Facebook’s “Black Box”


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This article was written by

Beth Kindig profile picture
High conviction analysis to give your tech portfolio a competitive edge
Beth Kindig is the CEO and Lead Tech Analyst for the I/O Fund and Tech Insider Network, delivering weekly in-depth tech stock analysis to her free newsletter subscribers. 

Tech Insider Network is unique in that we blend real tech industry experience with active portfolio management. We pioneered combining cutting-edge fundamentals with high-performing technical analysis for retail.

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Beth Kindig has twelve years of experience in competitive and product analysis in the tech industry dating back to 2011. Considering tech growth stocks took off after the financial crisis, she is a veteran in every sense of the word.

Her tech conference appearances date back to 2014 and her analysis began garnering press in the same year. She is known for making bold calls on tech stocks and offers a weekly free newsletter that leverages her ten years of experience in the private markets. Her newsletter has seen gains of up to 403% in three years.

It is not only the big gains she has achieved with individual stocks but also the quality and consistency of her analysis and how she carefully forms her theses that have placed Beth on the map as one of the best tech analysts in the market.

She has formed a proven methodology of choosing the right investments from being exposed to hundreds of tech growth companies over the past 10 years.

This is not a methodology that the traditionally trained can learn or repeat. Kindig has spoken at many tech conferences including the Android Developers Conference, GamesBeat, Advertising Week NYC, Tech Week Chicago, and BlackHat. She has been published in Forbes, MarketWatch, Venture Beat, MediaPost, AdExchanger, and the International Association of Privacy Professionals. She has appeared on Fox Business News, CNBC, TDAmeritrade, CoinDesk, NPR, Bloomberg TV Asia, Motley Fool podcast, This Week in Startups and more discussing her stock analysis.

Analyst’s Disclosure: I am/we are short FB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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