Facebook stock returns
Social media giant Facebook (FB) rose 14.6% in April 2019. The stock is currently trading at $192.53, which is 56% above its 52-week low of $123.02 and 12% below its 52-week high of $218.62. Facebook announced its first-quarter results last month and reported sales of $15.08 billion, a rise of 26% YoY, which was higher than analyst estimates of $14.98 billion. Though sales growth has been robust, it has been slowing over the last few quarters, as seen in the below chart.
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Facebook’s EPS were $0.85 in the first quarter and lower than analyst estimates of $1.63. Facebook had to set aside $3 billion for a fine from the FTC (Federal Trade Commission). Excluding this fine, Facebook’s EPS would have been $1.89.
Privacy concerns and controversies
Privacy concerns have impacted Facebook stock considerably over the last 12 months. Consumer giant Proctor and Gamble (PG) is frustrated that digital advertising platform operators aren’t fixing the problems it sees. As a result, the company is considering cutting its digital advertising budget and boost spending on traditional advertising channels such as TV commercials. Facebook derives almost all its sales from advertising.
Russia’s data privacy law requires social media companies to store data locally, and Facebook has about nine months to comply. It needs to clean up the mess sooner rather than later to ensure sustainable revenue growth.
Facebook stock lost 27% last year and has staged a remarkable comeback as the stock is up 47% this year.