How Facebook just blew a great quarter
Investors are up by a huge amount from Facebook’s lows
Even before Facebook (FB) investors could start celebrating a strong quarter of earnings growth, the company cooled off the party.
During the conference call, the company’s Chief Financial Officer David Wehner cautioned Facebook would be ramping up spending by up to 70% in 2015 and gave disappointing revenue guidance for the fourth quarter. That’s exactly what investors don’t want to hear, especially as they’ve seen how Amazon.com has fallen into the red by making big investments.
Facebook’s caution on how spending might affect future quarters is causing the stock to sell off in afterhours trading. Shares are down 10%. Analysts were expecting Facebook to earn an adjusted $2.04 a share in 2015, up 25% from 2014, says S&P Capital IQ. Revenue was expected to hit $16.6 billion in 2015, up 35% from 2014.
Wehner also said revenue would rise somewhere between 40% and 47% in the fourth quarter, which was slightly below the views of some optimistic analysts. Maintaining revenue growth was going to be challenging in the fourth quarter since it was a year-ago that the company launched its successful initiative to put ads in users’ News Feeds. Revenue soared 63% to $2.6 billion during the fourth quarter of 2013.
Following another strong quarter of earnings growth — and signs Facebook (FB) is the only company that “gets” mobile — shares had been on fire. Facebook investors are up 356% from early September 2012 when the stock fell to $17.73 on all sorts of talk about the company’s struggles.
So far this year through Tuesday’s close, Facebook’s stock is up 46%, by far the best performer among the social media stocks. Twitter, in comparison, is down 31% this year.
Shares of Facebook gained 49 cents, or 0.6%, to $80.77 during regular trading.
Still, this is far from a faceplant. The company reported quarterly profit of $806 million, up 89% from the year-ago period. Facebook reported 59% higher revenue of $3.2 billion during the period.
Source: Usatoday-How Facebook just blew a great quarter
