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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 t

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.
    - dylan604 5y ago
      But it's not even a difference of billions like 31 to 30. It's these numbers were like the 3rd digit after the decimal different. Sure, in these numbers that's still millions but only single digit millions. It's literally a rounding error depending on least significant digits. In some places, they only had 2 digits. To get to the offsets, they had to increase the accuracy. Literal rounding errors.
  - parineum 5y ago
    > 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. One incentivizes people to build iPhones and the other takes money from poor people.
    - dylan604 5y ago
      The poor people can also buy stocks in an attempt to "win big". It's just much easier to approach a bookie that doesn't care about status compared to a broker who wouldn't be so welcoming to certain clientele.
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.

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.
  - dylan604 5y ago
    But it's not even a difference of billions like 31 to 30. It's these numbers were like the 3rd digit after the decimal different. Sure, in these numbers that's still millions but only single digit millions. It's literally a rounding error depending on least significant digits. In some places, they only had 2 digits. To get to the offsets, they had to increase the accuracy. Literal rounding errors.
- parineum 5y ago
  > 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. One incentivizes people to build iPhones and the other takes money from poor people.
  - dylan604 5y ago
    The poor people can also buy stocks in an attempt to "win big". It's just much easier to approach a bookie that doesn't care about status compared to a broker who wouldn't be so welcoming to certain clientele.

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.