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Here are the results that caused this: - Earnings per share: $3.67 vs $3.84 expected - Revenue: $33.67 billion vs $33.4 billion expected Facebook also mis

by gzer0 5y ago

Here are the results that caused this: - Earnings per share: $3.67 vs $3.84 expected - Revenue: $33.67 billion vs $33.4 billion expected Facebook also missed estimates with user numbers. - Daily Active Users (DAUs): 1.93 billion vs 1.95 billion expected - Monthly Active Users (MAUs): 2.91 billion vs 2.95 billion expected - Average Revenue per User (ARPU): $11.57 vs $11.38 expected Future guidance was the biggest miss. - Q1 revenue guidance was $27 billion to $29 billion, while analysts were expecting sales of $30.15 billion

distrill 5y ago
It's so confusing to me see headlines calling this a "huge earnings miss". Revenue was greater than expected, as was ARPU. I get that the users are under, but this seems pretty far from a huge miss, no?
- AuthError 5y ago
  I think it's the guidance that caused the dip.
- jiveturkey 5y ago
  earnings != revenue
  - distrill 5y ago
    not entirely, but revenue is a huge component of earnings. this might be sort of a miss but not a huge one (from my caveman point of view, but i don't really know what i'm talking about, hence my confusion)
- deleted 5y ago
  [deleted]
- DannyBee 5y ago
  Thy also issued guidance that next quarter will come in under as well. Investors are looking for signs facebook is dying/not worth it. Slow growth (the low end number on guidance for next quarter is 3% growth) and not making the DAU numbers support that thesis for them. Live by the growth, die by the growth.
- Kranar 5y ago
  Feel free to do a deep dive on the meaning and nature of earnings estimates, and you'll find it's mostly just a service that exists because it gives the appearance of legitimacy to various financial institutions. Earnings estimates do not come down from God and there's no one single earnings estimate either, different sites and sources will report different estimates. Typically it's just the average or the median of a bunch of guess work done by analysts across a bunch of different brokerages or financial institutions and they exist to give credibility to said institutions. A basic quantitative analysis of earnings estimates reveals that they are not particularly accurate when compared to the earnings guidance given by the company itself, and in the rare cases where companies provide no guidance, estimates are almost worthless. All this is to say don't confuse the term "Wall Street estimates" with what people who actually buy and sell stock estimate. The actual people who have skin in the game and face tangible consequences if they're wrong don't take these earnings estimates that seriously, and conversely the analysts who produce these estimates don't have much of any skin in the game themselves and suffer next to no consequences for being wrong.
  - dylan604 5y ago
    This is what I've never understood. These estimates are just that, estimates. They are guesses, potentially educated guesses based on some data, but guesses/hopes/prayers none the less. It's like sports teams and all of the talking heads giving their opinions on the upcoming matches. In sports, it's called betting. But in business, it's called investing. It's the same thing, only one is more widely accepted an legal.
    - jliptzin 5y ago
      Yea that’s why I don’t understand the big fuss surrounding sports gambling/online poker etc. There’s currently something called the options market, much larger than both those things combined, where people are betting one way or the other on minute differences in a company’s quarterly earnings reports. You want to ban online gambling? Ok fine, I can easily go bet my entire life savings on whether Facebook earnings will be 30 billion or 31 billion next quarter.
- np- 5y ago
  The reason is that any earnings miss is a signal that Facebook has already peaked and is on its way down and out. Especially considering all the other negative news around it, it might not be able to recover from a tailspin
- jsemrau 5y ago
  It underlines the general volatility and uncertainty in the general market rather than a problem of FB.
dmurray 5y ago
It's not really plausible that the market can predict Facebook's earnings to within 5% and that such a small miss would cause a rational investor to value Facebook 20% lower. This seems more like a symptom of the market being generally skittish, with a small side of "expected" earnings actually being a low-biased estimate, so it's more like a 10% miss.
- DavidSJ 5y ago
  If Facebook's earnings growth is 5 percentage points per year lower than previously believed, then after less than five years, that's 20% less profit. Markets extrapolate growth rates into the future, not just the next quarter.
  - hw 5y ago
    This. People forget markets are forward looking. Forward guidance matters more than a beat/miss on estimates. Zuck is also kind of saying that their slice of the pie is getting smaller due to competition like Tiktok. That just kills sentiment. Hard to say if the metaverse will play out favorably or if it is going to just be hype. If I were to tell my past self 10 years ago that this is the world we live in now with EVs and cryptocurrencies etc being mainstream I would certainly not believe it nor would I have bet the farm on Elon or Bitcoin
- paulpauper 5y ago
  it's always like this with earnings reports. pennies can make the difference between 10% moves
  - errcorrectcode 5y ago
    "I see a speck of dust on the tire. Minus $100."
- mrcode007 5y ago
  Lots of funds are prohibited from trading after hours. There’s also low liquidity in after hours. Very easy to push the price however you want because NMS protections are also off during those hours. Reversal after overreaction like this is one of the strongest market anomalies you can stick to EMH fans.
vishnugupta 5y ago
I guess this is how capitalism works? Continuous growth or die. Despite having just about every living human as their customer they are expected to grow.

by gzer0 5y ago

distrill 5y ago

It's so confusing to me see headlines calling this a "huge earnings miss". Revenue was greater than expected, as was ARPU. I get that the users are under, but this seems pretty far from a huge miss, no?

AuthError 5y ago
I think it's the guidance that caused the dip.
jiveturkey 5y ago
earnings != revenue
- distrill 5y ago
  not entirely, but revenue is a huge component of earnings. this might be sort of a miss but not a huge one (from my caveman point of view, but i don't really know what i'm talking about, hence my confusion)
deleted 5y ago
[deleted]
DannyBee 5y ago
Thy also issued guidance that next quarter will come in under as well. Investors are looking for signs facebook is dying/not worth it. Slow growth (the low end number on guidance for next quarter is 3% growth) and not making the DAU numbers support that thesis for them. Live by the growth, die by the growth.
Kranar 5y ago
Feel free to do a deep dive on the meaning and nature of earnings estimates, and you'll find it's mostly just a service that exists because it gives the appearance of legitimacy to various financial institutions. Earnings estimates do not come down from God and there's no one single earnings estimate either, different sites and sources will report different estimates. Typically it's just the average or the median of a bunch of guess work done by analysts across a bunch of different brokerages or financial institutions and they exist to give credibility to said institutions. A basic quantitative analysis of earnings estimates reveals that they are not particularly accurate when compared to the earnings guidance given by the company itself, and in the rare cases where companies provide no guidance, estimates are almost worthless. All this is to say don't confuse the term "Wall Street estimates" with what people who actually buy and sell stock estimate. The actual people who have skin in the game and face tangible consequences if they're wrong don't take these earnings estimates that seriously, and conversely the analysts who produce these estimates don't have much of any skin in the game themselves and suffer next to no consequences for being wrong.
- dylan604 5y ago
  This is what I've never understood. These estimates are just that, estimates. They are guesses, potentially educated guesses based on some data, but guesses/hopes/prayers none the less. It's like sports teams and all of the talking heads giving their opinions on the upcoming matches. In sports, it's called betting. But in business, it's called investing. It's the same thing, only one is more widely accepted an legal.
  - jliptzin 5y ago
    Yea that’s why I don’t understand the big fuss surrounding sports gambling/online poker etc. There’s currently something called the options market, much larger than both those things combined, where people are betting one way or the other on minute differences in a company’s quarterly earnings reports. You want to ban online gambling? Ok fine, I can easily go bet my entire life savings on whether Facebook earnings will be 30 billion or 31 billion next quarter.
np- 5y ago
The reason is that any earnings miss is a signal that Facebook has already peaked and is on its way down and out. Especially considering all the other negative news around it, it might not be able to recover from a tailspin
jsemrau 5y ago
It underlines the general volatility and uncertainty in the general market rather than a problem of FB.

dmurray 5y ago

It's not really plausible that the market can predict Facebook's earnings to within 5% and that such a small miss would cause a rational investor to value Facebook 20% lower. This seems more like a symptom of the market being generally skittish, with a small side of "expected" earnings actually being a low-biased estimate, so it's more like a 10% miss.

DavidSJ 5y ago
If Facebook's earnings growth is 5 percentage points per year lower than previously believed, then after less than five years, that's 20% less profit. Markets extrapolate growth rates into the future, not just the next quarter.
- hw 5y ago
  This. People forget markets are forward looking. Forward guidance matters more than a beat/miss on estimates. Zuck is also kind of saying that their slice of the pie is getting smaller due to competition like Tiktok. That just kills sentiment. Hard to say if the metaverse will play out favorably or if it is going to just be hype. If I were to tell my past self 10 years ago that this is the world we live in now with EVs and cryptocurrencies etc being mainstream I would certainly not believe it nor would I have bet the farm on Elon or Bitcoin
paulpauper 5y ago
it's always like this with earnings reports. pennies can make the difference between 10% moves
- errcorrectcode 5y ago
  "I see a speck of dust on the tire. Minus $100."
mrcode007 5y ago
Lots of funds are prohibited from trading after hours. There’s also low liquidity in after hours. Very easy to push the price however you want because NMS protections are also off during those hours. Reversal after overreaction like this is one of the strongest market anomalies you can stick to EMH fans.

vishnugupta 5y ago

I guess this is how capitalism works? Continuous growth or die. Despite having just about every living human as their customer they are expected to grow.