See below for a summation of their Q3 Earnings Report:
Mark Zuckerberg, the founder and the face of Facebook (NASDAQ:FB), reported on their Q3 profits following the closing bell this past Tuesday. It was the hope of Facebook’s shareholders that the company would be able to surpass expectations in regard to revenues, user engagement, and earnings per share.
They had to settle for just one of the items on their wish-list, and the news was met with mixed reactions per our market investigators:
Per Refinitv, although their Earnings Per Share (EPS) was $1.76 instead of the estimated $1.47, their revenue was $50 million below the estimated $13.78 billion. Per FactSet and StreetAccount, their Daily Active Users (DAUs) and Monthly Active Users (MAUs) were both 20 million below the estimated 1.51 billion (DAUs) and 2.29 billion (MAUs).
Shares of Facebook stock reeled from whiplash, their earnings going up nearly 5% then quickly falling 6% following the earnings call. After the dust had settled, they had a net gain of 3%. In the days following that gain, they added even more profit to their totals.
The question on everyone’s mind is this, have we seen the worst of it or is there more bad news on the horizon?
Shareholders have credible sources to back their belief that Facebook stocks have reached their apex
No one will argue the fact that Facebook has had a bad year. Between the investigations into Russian tampering and the Cambridge Analytica debacle, alongside the founders of Instagram beating a hasty retreat, Facebook has been suffering. Mostly, from problems of their own making.
More than that though, shareholders are most interested in the cold hard numbers, and those numbers don’t lie. You can clearly see a downshift in revenue over the years.
In a bizarre instance of inversely relating data, while their profits continue to go down, their stocks continue to rise. Is this the bearish market rearing its head to finally knock Facebook shares down a peg from their multi-year bullish trend?
As we follow the above chart’s trend-line we can only hope that it bolsters the company’s teetering reputation while simultaneously preventing any further losses in relation to user growth. Regrettably, that may just be wishful thinking.
From FANG, to ANG?
Few stocks more accurately depict the current state of FANG quite like Facebook. It has lost just under half of its valuation during the past four months alone. Netflix (NASDAQ:NFLX) may be the biggest loser of October, with a fall in stocks of nearly 20%, Facebook wins overall as the member of FANG in the most trouble when looking solely at the peaks in stock price towards Monday’s capitulation (if you can even call it that).
In a game of ‘Who is the Weakest Link’ Facebook may prove to be FANG’s Achilles Heel. Stagnating user numbers, loads of bad press, and Congressional Hearings to boot, it is the deepest hope of Facebook investors that the worst has come to pass.
Though it is a fact that our market investigators were not expecting the success for EPS, this quarterly earnings report is looking more like a fumble of the proverbial ball. The largest problem the company is facing is their depleted user growth. Save for a last-minute rally in that area, painful hits to the stock can be expected in the future, hitting Bull Run players where it hurts. No matter how much razzle and dazzle Facebook tries to bring to its presentations, these earnings may not be enough to encourage buying from investors.
It seems like FANG might be facing a reality show-esque elimination round, and Facebook is on the chopping block.