The Facebook Inc (NASDAQ: FB) stock price rose 1% after the advertising giant released results for the June quarter this morning and beat estimates for earnings per share and revenue. Here’s what you need to know.
Founded in 2004, Facebook is the world’s largest social media technology business, with names like Instagram, WhatsApp and Oculus also part of its stable of brands. Over 2 billion people use Facebook once per month and more than 1.5 billion people use the platform daily. Across all of its major brands, including Messenger, 2.7 billion people now use Facebook products at least once per month.
EPS And Revenue Beat Estimates
Facebook reported revenue for the June quarter of $16.89 billion, up 28% year-on-year and beating the average estimate of $16.5 billion.
Total costs and expenses also increased due to a $2 billion legal expense related to the US Federal Trade Commission (FTC) settlement and a $1.1 billion income tax expense following a tax ruling that was overturned in the Court of Appeals.
With these additional costs, Facebook reported diluted earnings per share (EPS) of $0.91, down from $1.74 per share in the June quarter 2018 and falling well below estimates of $1.88 per share.
However, excluding these one-off expenses, diluted EPS beat estimates with a result of $1.99 per share.
Daily active users were 1.59 billion in June, up 8% year-on-year while monthly active users also increased 8% to 2.41 billion users. At the end of the June quarter, Facebook held $48.6 billion in cash, cash equivalents and marketable securities.
Is Facebook A Buy?
The unexpected settlements and tax costs in the quarter highlight some of the regulatory and legal risks that Facebook is vulnerable to, however, it also shows that Facebook was prepared and able to deal with the costs.
Facebook’s revenue growth rate continues to impress, and the stock has risen on the back of the quarterly results.
If Facebook can continue meeting or exceeding estimates, it’ll certainly be a company to have on your watchlist or in your portfolio.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.