Although Facebook and Netflix’s earnings disappointed, Alphabet’s earnings were spectacular
Three of the FAANG stocks reported their respective second-quarter earnings recently. Both Netflix (NFLX) and Facebook (FB) had seen stellar runs in the stock market in the few weeks running up to their respective earnings reports. However, both stocks have corrected around 20.0% each from their respective peaks before their earnings announcements.
Netflix added 4.47 million subscribers worldwide in the second quarter, while analysts had expected 5.11 million additions. Facebook, meanwhile, posted $13.23 billion in revenues, growing 42% YoY, compared to the previous quarter’s 49.0% growth. Analysts expected the social media giant to generate $13.34 billion in revenues.
Why Facebook and Netflix are still attractive in the long run
Facebook and Netflix tumbled as the market realigned its growth expectations for the two companies. Poor results mean that the two stocks may be relatively volatile over the next three months, at least until they announce their third-quarter results.
Facebook still has some room to monetize its various apps, and it has deep pockets to invest in its content push or to expand its AR/VR business. The company’s crown jewel, Instagram, is seeing tremendous growth. The tech giant currently depends on Instagram to an extent to deliver growth.
Meanwhile, Netflix still has a lot of scope to expand abroad. The company has been pushing hard to increase its non-English content, particularly in Spanish and Hindi. Netflix has identified India as one of its key markets.