Facebook Inc. (FB) crushed its Q1 2019 earnings estimates on both top line revenue and bottom line profit. Revenue grew 26% year-over-year, giving rise to investor amnesia as it relates to its string of privacy scandals. Facebook is now testing its all-time highs with a reasonable price-to-earnings multiple when compared to its tech cohort. As the company attempts to move past its privacy issues while restoring trust with its user base, negative sentiment has abated. Facebook continues to post unparalleled growth for a company of its size while its platforms are the go-to properties for advertisers and influencers. Will Facebook be able to march forward without being plagued by the slew of issues ranging from international regulatory scrutiny, user privacy issues, high-level employee mass exodus, and a questionably toxic company culture? Some analysts argue that the negative confluence of the aforementioned issues will drive up costs, narrow revenue streams, and weaken the user base. The privacy scandal has already resulted in increased costs surrounding compliance, monitoring, censorship, and scrubbing the platform from deceptive marketing. If the company continues its path forward on the privacy front while posting best-in-class revenue growth, the stock will likely continue to elevate higher.
Q1 Blowout Quarter
Facebook continues to deliver phenomenal growth across the company while its cash hoard swells to $45 billion. The company posted EPS and revenue of $1.89 and $15.08 billion, respectively. These numbers beat on EPS by $0.27 and beat on revenue by $104.3 million.
"We had a good quarter, and our business and community continue to grow," said Mark Zuckerberg, Facebook founder, and CEO. "We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet."
The stock exploded higher on the earnings news, shooting from $182 to $195 or 7% in a single session. Facebook’s properties continue to grow and continue to expand its revenue moat in advertising spend. Instagram and Whatsapp will likely serve as major growth catalysts as these assets still have a lot of room for its monetization efforts. Continue reading "Facebook - Privacy Scandal Amnesia"