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Facebook Earnings Report: Important Numbers Look Good


Oct. 31 2019, Updated 11:44 a.m. ET

Facebook’s (FB) third-quarter earnings results were impressive. All of the company’s important numbers beat consensus expectations. As a result, Facebook stock rose.

The company reported an EPS (earnings per share) of $2.12 on revenues of $17.7 billion for the third quarter ending September 30. The earnings and revenue numbers increased from the same period last year and beat the consensus estimates. The EPS rose from $1.76 a year ago, which indicates 20% growth YoY (year-over-year). The revenues increased from $13.7% a year ago, which represents an increase of 29% YoY. The consensus estimates called for an EPS of $1.91 and revenues of $17.4 billion.

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Facebook and Alphabet stocks moved in opposite directions 

Facebook finished the third quarter with 1.62 billion daily active users—up from 1.59 billion in the previous quarter. The consensus on Wall Street called for Facebook to end the third quarter with 1.61 billion daily users.

The company minted more money from each of its users during the third quarter than it did a year ago. The company’s ARPU (average revenue per user) rose to $7.26 from $6.09 a year ago. The consensus estimate called for a third-quarter ARPU of $7.09.

Facebook released its third-quarter results after the closing bell on Wednesday. The stock rose 4.5% in after-hours trading after the company posted solid earnings results. In contrast, Google parent Alphabet (GOOGL) stock fell 1.6% immediately after it released its third-quarter results. The company’s earnings fell short of consensus expectations.

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Best-performing FAANG stock in 2019

Facebook is one of the top-performing FAANG stocks this year. The stock has risen 43.6% in 2019 as of Wednesday. Apple topped the charts as the best-performing FAANG stock in 2019. So far, the stock has risen 54.2%. Alphabet, Amazon (AMZN), and Netflix (NFLX) stocks have risen 20.7%, 18.5%, and 8.90% in 2019, respectively. Netflix stock has been under pressure this year amid concerns about the growing competitive threat to its business. Walt Disney (DIS) and Apple are about to launch video services that will challenge Netflix for customers.

Facebook faces headwinds

While Facebook reported solid third-quarter earnings results, the performance isn’t guaranteed in the future. The company’s expenses are rising. As a result, Facebook continues to lose money through fines. The company still faces multiple antitrust investigations. All of these headwinds could weaken Facebook’s earnings in the future. For example, rising expenses caused Alphabet to miss its third-quarter earnings expectation.


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