Facebook Crushes Earnings: FB Stock Soars on Q4 EPS, Revenue Beat

Facebook earnings ()

Facebook earnings ()

Back in December I gave you 600 million reasons to like Facebook (FB) stock. Here’s a few more.

Facebook shares are rising more than 3% in the after-hour session Wednesday, reaching a high of $137.26 after the social media giant not only topped Wall Street's fourth quarter estimates on revenue and earnings per share, Facebook easily surpassed analysts’ user growth expectations, suggesting concerns about users defecting to Snapchat were overstated.

What’s more, the degree of Facebook’s strong bottom-line beat underscores the extent to which Facebook — amid allegations of so-called “fake news” — can still deliver real profits. As such, while these shares, currently at all-time highs, aren’t aren’t cheap today, you would be hard-pressed to find another large-cap tech stock with a more attractive combination of long-term growth potential and value.

Let’s go through the numbers.

Facebook’s user engagement was the main question mark entering Wednesday’s numbers. In the three months that ended December, the Menlo Park, Calif.-based tech giant grew its Daily Active Users (DAUs) by 16% year over year 1.23 billion, topping forecasts of 1.21 billion. Its mobile DAUs came to 1.15 million, rising 23%, while its Monthly Active Users (MAUs) increased 17% year over year 1.86 billion, above 1.84 million expected. The company said mobile MAUs totaled 1.74 billion, a 21% rise year over year

"Our mission to connect the world is more important now than ever," said CEO Mark Zuckerberg. "Our business did well in 2016, but we have a lot of work ahead to help bring people together.”

For the three months that ended in June, the company reported adjusted earnings of $1.41 per share. Not only did that easily beat Wall Street estimates by 10 cents, it marks an almost 80% rise year over year. Fourth quarter revenue came to $8.81 billion, which climbed 51% year over year and beat consensus estimates of $8.51 billion.

Revenue was driven by a 53% year over year rise in ad revenue, reaching $8.6 billion. The company said mobile ad revenue was $5.42 billion, 81% year over year, topping the $4.84 billion expected. Mobile ads now account for 84% of ad revenue, compared to 76% in the a year ago. Notably, the company’s mobile advertising revenue now accounts for 84% of total revenue, up four percentage points year over year.

Facebook, grew operating margins to 52%, said it ended the year with cash and cash equivalents and marketable securities of $29.45 billion. Given these impressive results, FB stock, which I advised should be owned, is destined to reach $150 by the end of the year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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