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Facebook Reports First Quarter 2019 Results

83 points by runesoerensen 7y ago

dweekly 7y ago
Over 200 (+10%) in the after-hours! https://www.google.com/search?q=NASDAQ:FB https://www.google.com/search?q=NASDAQ:FB While P/E ratio is back up to 24 (after December's low of 17) that's still way more conservative than their 70-80 range a chunk after IPO: https://www.macrotrends.net/stocks/charts/FB/facebook/pe-ratio https://www.macrotrends.net/stocks/charts/FB/facebook/pe-rat... That says to me that the markets are pricing Facebook as a relatively well-characterized business at this point and don't see the likely fines as material to the business. (Disclaimers: I own no shares or options of FB nor am I planning to acquire any. I am a former employee.)
- rdlecler1 7y ago
  Apple had a P/E ratio of something like 12-13 and then went on to more than double it’s stock price. Markets are not always very wise.
  - tuesdayrain 7y ago
    A P/E ratio of 13 seems tiny. I remember when AMZN was over 1000.
    - scottlocklin 7y ago
      Yeah, I remember too: that was when they had giant opportunities for growth. Lower P/E means lower opportunity for growth. Apple's growth prospects are fairly low on the current trajectory of the company. They were also fairly low when it was 13, regardless of what the stock price did.
  - formercoder 7y ago
    Apple and FB have very different cap structures so let’s compare their EV/EBITDAs not P/E. FB is ~16 and AAPL is ~12. Much closer from that perspective.
  - arcticbull 7y ago
    P/E ratios aren’t absolutes, they vary from industry to industry. Hardware companies have lower P/E ratios than software companies and Apple has traditionally been regarded as a hardware company.
    - formercoder 7y ago
      Multiples like P/E are just a proxy for cash flows, discount rate, and growth. That P/E tends to stratify on industries makes sense not just because of growth, but also its sensitivity to capital structure. So asset heavy companies with lots of leverage will have different P/E ratios even with the same unlevered free cash flows.
  - jbverschoor 7y ago
    I think that even didn't include their cash reserves.
- fargo 7y ago
  Stupid question, aren't employees paid partly in stock?
  - reissbaker 7y ago
    Most are, but I assume the GP sold their stock, either while they were at FB or after they left.
    - dweekly 7y ago
      At both Google and Facebook I elected the Autosale programs to immediately sell my company equity for cash and then immediately automatically reinvest the cash in an ETF portfolio (using Schwab Intelligent Portfolios). When autosale wasn't available I would habitually sell on the first open trading window day.
      - azinman2 7y ago
        Why? Both of those stock have performed very well.
        granzymes 7y ago
        Risk. If you are an employee you are already have significant exposure to the risk of the business doing poorly, so it makes sense to diversify. Maybe frame it this way: if I handed you $20,000 to put in the stock market would you put it all in your employer's stock?
        likpok 7y ago
        Because they perform well up until the point that they don't. By working at $Company, you're already invested heavily in their success. If a substantial portion of your net worth is also tied up in their stock, the company having problems may ruin you. Imagine: the stock price tanks due to some real issues, and then you get laid off. In one swoop you've lost both your salary and your savings. If you'd instead sold some or all of your stock, you'd have a solid nest egg to fall back on. And companies doing very well up until the point that they suddenly explode is not exactly unheard of: consider Enron, or even Groupon or Zynga. It's true that it's unlikely for FB to implode over the next year, but last year was real rough for the company: the July earnings went from 220 to ~160. If your whole savings is wrapped up in that, that's a scary drop. (You can say that it's recovered, but only partially and slowly). Long story short: it's easy to pick the winners if you're looking backwards.
cm2012 7y ago
Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase.
- cjhopman 7y ago
  > Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase Generally for a service like FB, just by becoming more valuable and useful to its users revenue can increase non-linearly with increases in users.
- basetop 7y ago
  I'm sure FB improved its monetization and will continue to improve it as it grows as a company. But they also benefit from an overall increase on online ad spending - which is expected to grow 19% this year ). https://techcrunch.com/2019/02/20/emarketer-digital-ad-forecast/ https://techcrunch.com/2019/02/20/emarketer-digital-ad-forec... Nearly 19% increase in online ad spending overall + FB's 8% growth + improved monetization and you can see why FB ad rev increased 30%. Online ad spending is expect increase by double digits for many years so FB, GOOG, etc are sitting pretty as long as they can hold onto and grow their userbase. Even if FB did nothing, their ad revenue would most likely increase by double digits every year simply because the digital ad space is increasing by double digits every year. Money is pouring into digital space and they have one of the biggest buckets.
  - MarkMc 7y ago
    Most Facebook revenue comes from US and Europe where user growth is basically zero. The 8% user growth is driven by poorer countries like India and Indonesia, so the contribution of user growth to revenue would be much less - I'd say around 4%. Also much of the increase in online ad spend comes because of the improved monetisation of online ads. If Facebook had just sat on their hands, I'd estimate that their revenue would have grown 4% due to user growth, 3% due to growth in average user income, and 5% due to increase in average screen time. That's a 12% tailwind. Facebook's actual revenue grew 26% so it's reasonable to say that around 14% of that was due to Facebook improving their ability to match users with advertisers. (Disclaimer: I own FB shares)
jtms 7y ago
I am pretty surprised the price continues to rise with the never ending torrent of bad news regarding how nefarious FB is when it comes to privacy and exploiting their users. I guess this goes to show just how few people care at all about their privacy... really makes me worry for the future.
- djohnston 7y ago
  or how overblown those concerns often are, since they are in fact being spouted by the business model that facebook effectively killed: media ads.
- deleted 7y ago
  [deleted]
- valleyjo 7y ago
  Like you say, no one cares. It’s not a problem that’s in your face that you’re always seeing. It’s an abstract thing that people chose to ignore or are entirely ignorant of — to FBs benefit.
- jedberg 7y ago
  Hang out with teenagers, or even 20 somethings, for just a little while, and you'll see that privacy means nothing to them. The youngest kids are a little better, sticking to Snapchat over Facebook and Instagram (because the messages are "temporary"). But for example, when a friend of mine got into college, she posted on Facebook, "just got checked in!" along with a picture of her school ID, her room key, and the form with the room number. I told her that someone could easily get into her room with that one photo, but she didn't care.
  - giancarlostoro 7y ago
    I cared a lot about privacy from my younger teen years 20 years ago while non of my friends did. If you dont understand anything about the data its all noise to you.
  - saagarjha 7y ago
    > privacy means nothing to them This is a blanket statement. I’m not convinced the rate of people who don’t care about their privacy varies significantly with age.
sytelus 7y ago
* Daily active users (DAUs) – DAUs were 1.56 billion on average for March 2019, an increase of 8% year-over-year. * Monthly active users (MAUs) – MAUs were 2.38 billion as of March 31, 2019, an increase of 8% year-over-year. * Headcount – Headcount was 37,773 as of March 31, 2019, an increase of 36% year-over-year.
- cm2012 7y ago
  The headcount is mostly hiring manual moderators.
  - polishTar 7y ago
    Moderation is probably done by contractors or vendors, not employees.
mindfulplay 7y ago
People keep harping on about 'delete Facebook': it doesn't matter because they have laid cookies everywhere and have already built a profile. Newly born people will at least have some connection through their other properties that will help lay their Pixel tracker all over the web properties.
- romanovcode 7y ago
  Doesn't it not work if you use uBlock? I thought it blocks FB pixel so they have no idea about your web doings.

83 points by runesoerensen 7y ago

Over 200 (+10%) in the after-hours! https://www.google.com/search?q=NASDAQ:FB https://www.google.com/search?q=NASDAQ:FB While P/E ratio is back up to 24 (after December's low of 17) that's still way more conservative than their 70-80 range a chunk after IPO: https://www.macrotrends.net/stocks/charts/FB/facebook/pe-ratio https://www.macrotrends.net/stocks/charts/FB/facebook/pe-rat... That says to me that the markets are pricing Facebook as a relatively well-characterized business at this point and don't see the likely fines as material to the business. (Disclaimers: I own no shares or options of FB nor am I planning to acquire any. I am a former employee.)

rdlecler1 7y ago
Apple had a P/E ratio of something like 12-13 and then went on to more than double it’s stock price. Markets are not always very wise.
- tuesdayrain 7y ago
  A P/E ratio of 13 seems tiny. I remember when AMZN was over 1000.
  - scottlocklin 7y ago
    Yeah, I remember too: that was when they had giant opportunities for growth. Lower P/E means lower opportunity for growth. Apple's growth prospects are fairly low on the current trajectory of the company. They were also fairly low when it was 13, regardless of what the stock price did.
- formercoder 7y ago
  Apple and FB have very different cap structures so let’s compare their EV/EBITDAs not P/E. FB is ~16 and AAPL is ~12. Much closer from that perspective.
- arcticbull 7y ago
  P/E ratios aren’t absolutes, they vary from industry to industry. Hardware companies have lower P/E ratios than software companies and Apple has traditionally been regarded as a hardware company.
  - formercoder 7y ago
    Multiples like P/E are just a proxy for cash flows, discount rate, and growth. That P/E tends to stratify on industries makes sense not just because of growth, but also its sensitivity to capital structure. So asset heavy companies with lots of leverage will have different P/E ratios even with the same unlevered free cash flows.
- jbverschoor 7y ago
  I think that even didn't include their cash reserves.
fargo 7y ago
Stupid question, aren't employees paid partly in stock?
- reissbaker 7y ago
  Most are, but I assume the GP sold their stock, either while they were at FB or after they left.
  - dweekly 7y ago
    At both Google and Facebook I elected the Autosale programs to immediately sell my company equity for cash and then immediately automatically reinvest the cash in an ETF portfolio (using Schwab Intelligent Portfolios). When autosale wasn't available I would habitually sell on the first open trading window day.
    - azinman2 7y ago
      Why? Both of those stock have performed very well.
      - granzymes 7y ago
        Risk. If you are an employee you are already have significant exposure to the risk of the business doing poorly, so it makes sense to diversify. Maybe frame it this way: if I handed you $20,000 to put in the stock market would you put it all in your employer's stock?
      - likpok 7y ago
        Because they perform well up until the point that they don't. By working at $Company, you're already invested heavily in their success. If a substantial portion of your net worth is also tied up in their stock, the company having problems may ruin you. Imagine: the stock price tanks due to some real issues, and then you get laid off. In one swoop you've lost both your salary and your savings. If you'd instead sold some or all of your stock, you'd have a solid nest egg to fall back on. And companies doing very well up until the point that they suddenly explode is not exactly unheard of: consider Enron, or even Groupon or Zynga. It's true that it's unlikely for FB to implode over the next year, but last year was real rough for the company: the July earnings went from 220 to ~160. If your whole savings is wrapped up in that, that's a scary drop. (You can say that it's recovered, but only partially and slowly). Long story short: it's easy to pick the winners if you're looking backwards.

cm2012 7y ago

Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase.

cjhopman 7y ago
> Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase Generally for a service like FB, just by becoming more valuable and useful to its users revenue can increase non-linearly with increases in users.
basetop 7y ago
I'm sure FB improved its monetization and will continue to improve it as it grows as a company. But they also benefit from an overall increase on online ad spending - which is expected to grow 19% this year ). https://techcrunch.com/2019/02/20/emarketer-digital-ad-forecast/ https://techcrunch.com/2019/02/20/emarketer-digital-ad-forec... Nearly 19% increase in online ad spending overall + FB's 8% growth + improved monetization and you can see why FB ad rev increased 30%. Online ad spending is expect increase by double digits for many years so FB, GOOG, etc are sitting pretty as long as they can hold onto and grow their userbase. Even if FB did nothing, their ad revenue would most likely increase by double digits every year simply because the digital ad space is increasing by double digits every year. Money is pouring into digital space and they have one of the biggest buckets.
- MarkMc 7y ago
  Most Facebook revenue comes from US and Europe where user growth is basically zero. The 8% user growth is driven by poorer countries like India and Indonesia, so the contribution of user growth to revenue would be much less - I'd say around 4%. Also much of the increase in online ad spend comes because of the improved monetisation of online ads. If Facebook had just sat on their hands, I'd estimate that their revenue would have grown 4% due to user growth, 3% due to growth in average user income, and 5% due to increase in average screen time. That's a 12% tailwind. Facebook's actual revenue grew 26% so it's reasonable to say that around 14% of that was due to Facebook improving their ability to match users with advertisers. (Disclaimer: I own FB shares)

jtms 7y ago

I am pretty surprised the price continues to rise with the never ending torrent of bad news regarding how nefarious FB is when it comes to privacy and exploiting their users. I guess this goes to show just how few people care at all about their privacy... really makes me worry for the future.

djohnston 7y ago
or how overblown those concerns often are, since they are in fact being spouted by the business model that facebook effectively killed: media ads.
deleted 7y ago
[deleted]
valleyjo 7y ago
Like you say, no one cares. It’s not a problem that’s in your face that you’re always seeing. It’s an abstract thing that people chose to ignore or are entirely ignorant of — to FBs benefit.
jedberg 7y ago
Hang out with teenagers, or even 20 somethings, for just a little while, and you'll see that privacy means nothing to them. The youngest kids are a little better, sticking to Snapchat over Facebook and Instagram (because the messages are "temporary"). But for example, when a friend of mine got into college, she posted on Facebook, "just got checked in!" along with a picture of her school ID, her room key, and the form with the room number. I told her that someone could easily get into her room with that one photo, but she didn't care.
- giancarlostoro 7y ago
  I cared a lot about privacy from my younger teen years 20 years ago while non of my friends did. If you dont understand anything about the data its all noise to you.
- saagarjha 7y ago
  > privacy means nothing to them This is a blanket statement. I’m not convinced the rate of people who don’t care about their privacy varies significantly with age.

sytelus 7y ago

* Daily active users (DAUs) – DAUs were 1.56 billion on average for March 2019, an increase of 8% year-over-year. * Monthly active users (MAUs) – MAUs were 2.38 billion as of March 31, 2019, an increase of 8% year-over-year. * Headcount – Headcount was 37,773 as of March 31, 2019, an increase of 36% year-over-year.

cm2012 7y ago
The headcount is mostly hiring manual moderators.
- polishTar 7y ago
  Moderation is probably done by contractors or vendors, not employees.

mindfulplay 7y ago

People keep harping on about 'delete Facebook': it doesn't matter because they have laid cookies everywhere and have already built a profile. Newly born people will at least have some connection through their other properties that will help lay their Pixel tracker all over the web properties.

romanovcode 7y ago
Doesn't it not work if you use uBlock? I thought it blocks FB pixel so they have no idea about your web doings.