Facebook’s failed to meet Wall Street’s expectations for revenue in the third quarter of 2018, and user growth is flatlining in its key markets, but its stock jumped 2% in after-hours trading.
On Tuesday, the Silicon Valley tech giant announced its Q3 2018 earnings. It just missed consensus expectations for revenue ($13.7 billion versus $13.8 billion), but earnings per share comfortably beat Street estimates — $1.76 versus $1.47 expected.
Daily Active Users in the US and Canada have now flatlined isnce Q1 2018 at 185 million — but that may come as a relief to investors that the company is not actively shedding users as a result of its tumultuous few months. Facebook is continuing to battle crises and repututional damage from multiple scandals, including Cambridge Analytica and the hack of 30 million users’ sensitive data.
The stock initially dropped more than 5% after Facebook published the results, before rebounding, and as of writing it hovers at around 1.5% in the green.
The company says foreign exchange headwinds totalled $159 million — more than enough to cover the amount Facebook missed revenue expectations by.
Here are the key number via Bloomberg:
- $1.76 GAAP EPS (versus $1.47 expected)
- $13.73 billion in revenue, up 33% year-on-year (versus $13.802 billion expected)
- 1.49 billion daily active users, up 9% year-on-year
- 2.27 billion monthly active users, up 10% year-on-year
- Operating margin of 50%, up from 42% a year prior
Most analysts remain optimistic on Facebook, despite its recent travails. Prior to market close, there was a consensus price target of $203.26, according to Bloomberg — up significantly from Tuesday’s share price of around $146. The stock’s all-time high is around $210.
“We expect Facebook’s revenue growth to remain robust, supported by multiple growth drivers,” Wedbush analysts wrote in a research note on Friday, ahead of Facebook’s Q3 earnings. “The company’s unmatched scale and ease of use when it comes to its advertising platform suggest that Facebook will continue to represent a core part of digital advertiser budgets.”
The company’s stock dropped 20% on its Q2 2018 earnings in July, when it failed to meet analysts expectations and warned that revenue growth rates were going to drop.
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