Today, I'm switching things up and digging into Facebook’s earnings release. After earnings, FB stock dropped 4%.
Results Overview
- Quarterly sales climbed 56% to $29.1 billion (~4.3% beat)
- 3.51 billion monthly active people (MAP) on the Facebook family of apps. 2.76 billion are active daily (>78%).
- Facebook, Instagram, and WhatsApp continued to benefit from a rise in consumers making purchases from brands directly through its apps.
- Facebook monthly active users (MAU) grew >7% YoY.
- Average Revenue per Person (ARPP) is up 37% YoY.
Guidance
- Facebook says it expects revenue growth to slow in the second half of the year.
- It previously warned that the impact of Apple’s privacy changes in its iOS operating system could slow the company’s ad-targeting capabilities. The company said there could be more significant impacts in the current quarter as more people update their Apple devices.
- The company still sees itself in growth mode and wants to expand its revenue streams.
Zuck’s Remarks
- On creators: “We want our platforms to be the best place for millions of creators to earn a living.” — “We’re going to keep our creator tools free to use through 2023.”
- On video: “Video now accounts for almost half of all time spent on Facebook.”
- On commerce: “Our approach is to work our way down the stack and build world-class services at every layer of commerce, starting from discovery at the top of the stack all the way down to payments.”
- On the metaverse: “We believe this is going to be the successor to the mobile internet.”
Valuation
- Facebook is trading at a discount to other US Big Tech firms.
- At $373.28 per share, FB is trading ~15.3x forward EBITDA.
- Facebook is more than the blue app on your phone and its huge base of daily and monthly active users has helped propel the company to a market cap of >$1 trillion. Under Zuck, FB has been able to optimize ad conversion rates, which has drawn a ton of advertising dollars to the platform. I’m still bullish on Facebook, especially at this valuation.
