Facebook shares rise as investors focus on earnings beat and buyback over revenue miss and outlook

Facebook shares rose by more than 3 percent in extended trading Monday, after the company reported better earnings than expected for its third quarter. However, revenue was below analysts' expectations.
Facebook also announced that it will increase its share buyback program to $50 billion.

These are the results.

Analysts expected earnings of $3.22, vs. $3.19 per Share

According to Refinitiv, $3.22 is less than the $3.19 analysts expected. Refinitiv estimates revenue at $29.01 billion, compared to $29.57 billion predicted by analysts.

According to Refinitiv, $29.01 billion is less than the $29.57 billion analysts expected. StreetAccount.com: Daily active users (DAUs), 1.93 billion, versus 1.93 billion as expected by analysts.

According to StreetAccount, 1.93 billion is more than 1.93 billion analysts expected. StreetAccount reports that the monthly active users (MAUs), are 2.91 billion, compared to 2.93 billion predicted by analysts.

According to StreetAccount, 2.91 billion is more than the 2.93 billion analysts expected. StreetAccount reports that analysts expect an average revenue per user (ARPU), of $10.00, compared to StreetAccount's $10.15 estimate.

The company revealed plans to separate Facebook Reality Labs from its reporting segment, starting in the fourth quarter. This unit is focused on hardware, augmented reality, and virtual reality products. Its family of apps which includes Facebook, Instagram Messenger, WhatsApp, Messenger and other services, will generate the other revenue segment.

Facebook anticipates that its investments in VR and hardware will reduce operating profit by $10 billion in 2021.

Facebook announced in July that it had formed a team to work on the metaverse. This is a digital world where multiple people can interact in a 3D environment. The company announced that it would make Andrew "Boz", currently head of Facebook's hardware department, chief technology officer by 2022.

Facebook's revenue grew 35% over a previous year, while net income rose 17% from $7.8billion to $9.2billion.

According to the company, it anticipates revenue between $31.5 billion and $34 billion for its fourth quarter. Analysts had projected sales of $34.8 billion. Facebook stated that the forecast "reflects significant uncertainty in the fourth quarter due to continued headwinds from Apple’s iOS 14 changes and macroeconomic and COVID related factors."

Apple introduced privacy modifications earlier this year. These prompts allow users to opt out of being targeted by ads in apps. Snap shares plunged 27% in its earnings report last Wednesday after Apple blamed iOS changes for disrupting its business.

The revenue from Facebook's "other", which includes consumer hardware like Oculus virtual reality headsets and Oculus, was $734 million. This is a 195% increase over the consensus StreetAccount estimate of $477 million.

The $9.9 billion StreetAccount consensus was not met by the company's $9.55 billion free cash flow.

Facebook reported that it now has 3.58 billion monthly users across its apps family, up from 3.51 million in the second quarter. This metric measures Facebook's total user base across its main apps, Instagram, Messenger, and WhatsApp.

The U.S. and Canada are two countries where Facebook generates higher average revenue per user than other regions. In the United States, Facebook reported 196 million daily active Facebook users, an increase of 195 million from the second quarter. The number of active users in Europe grew to 308million, up from 307million in the second quarter.

Investors continue to dig into the numbers. However, the most recent attention on Facebook comes from a series reports initially published by The Wall Street Journal about internal research that was released by Frances Haugen, a former employee.

Haugen shared with the Journal some documents that she had gathered during her time at Facebook. She then testified before a Senate panel about her experiences at Facebook earlier in the month. Haugen has since released the documents to several other news outlets, which led to more news articles.

These reports reveal that Facebook is aware and trying to rectify many of the harms it apps and services are causing, but doesn't fix them or fails to do so. In the coming weeks, more documents will be shared daily.

Haugen started leaking documents and was testifying. A whistleblower submitted an affidavit containing allegations about Facebook's behavior. Sophie Zhang, a previous whistleblower, has also spoken out against the company.

Facebook's Monday afternoon call with analysts will mark the first public appearance by CEO Mark Zuckerberg since Haugen started releasing documents. In a Facebook post, Zuckerberg addressed some claims made by Haugen as well as the Journal on Oct. 5.

WATCH: Facebook must be bullish about its stock

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