The Difference Between GAAP And Non-GAAP In One Chart

Tyler Durden's picture

What is the difference between GAAP and Non-GAAP Net Income? Only about 109% if you are Facebook.

The chart below shows the quarterly reported Net Income for the social networking site on a GAAP and non-GAAP basis.

Adding up the quarterly numbers from Q4 2011 until Q4 2013, one gets the following GAAP vs Non-GAAP differential.

Guess which accounting gimmick-based number is FaceBook "valued" on.

* * *

But there is good news: according to FaceBook it now has 201 million Monthly Average Users in the US and Canada.

One may ask - how many people are employed in the US and Canada - the answer 136.9 million in the US and 17.7 million in Canada, or a total of 154.6 million. Oh well, those 50 million who are unemployed - they will just grow into the labor force eventually and be able to buy all those products whose ads they click on.

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Max Damage's picture

Facebook isn't valued, it's just a Wall street farce. Social media will be the straw that breaks the camels back on this overvalued market

Say What Again's picture

Tyler,  Is this a trick question?

Xibalba's picture

Social Media is the new smoking

TeamDepends's picture

The Dude: Walter, what is the point? Look, we all know who is at fault here, what the fuck are you talking about?

adr's picture

But, but, but poking Grandma is worth billions!!!!!!!!

Clayton Bigsby's picture

In the hundreds of times I've been on Facebook, i've probably clicked on an ad once. I don't understand how they're monetizing this shit.

WonderDawg's picture

I've never once clicked an ad on FB. Not once. I've asked around and everyone I've asked says pretty much the same thing, they scroll right past 'em. I'm with you, no idea how they're doing it, robots out clicking on ads probably, but if the advertisers catch on to the scam, the gig is up.

mumbo_jumbo's picture

just like google, it's based on click fraud.

Cdad's picture

Non GAAPing its way back to all time highs.  What a beautiful Ponzi scheme it is.

Greenskeeper_Carl's picture

hey, if the gov doesnt have tp use GAAP and gets to pretend its 220T in unfunded future debts doesnt exist, why cant facefuck?

NeedleDickTheBugFucker's picture

Don't like the results your inflation calculation produces?  Simply change the methodology (see John Williams @ Shadow Stats on the numerous changes since 1980).

Don't like the unemployment figures generated by your model at the BLS?  Simply change the methodology (see change from U-6 to U-3).

Don't like high P/E ratios as the result of using GAAP?  Simple change to non-GAAP (aka "adjusted" cash EPS).


TeamDepends's picture

The Enron Shuffle?

Rainman's picture

Since when did we assume the accounting profession wasn't a wheel on the earnings ponzi machine ? sheesh..

LibertyBear's picture

The Wheat committee, led my Francis M. Wheat, released its report in 1972 that the standard setting process should continue to be performed in the private sector but subject to oversight from the Securities and Exchange Commission (SEC). The recommendation to give more power and control to the SEC from a previous SEC Commissioner should not be overlooked. 

If the private sector is subject to oversight from the SEC, which can overrule or modify anything at will, why doesn’t the SEC just write the standards itself? This was likely done to give the appearance of independence in the accounting profession when in reality it is fully controlled by the SEC.


The American Institute of Certified Public Accountants (AICPA) disbanded the Accounting Principles Board (APB) in June 1973 and commenced the Financial Accounting Standards Board (FASB) in July 1973. The FASB advisory board is composed of twenty to thirty economists, attorneys, accountants, auditors, security analysts, bankers and educators.

cossack55's picture

Cool.  Can you do a JPM and GS vs FASB 157 chart next.

TheRideNeverEnds's picture

pffft, the 200 P/E in there means FB is basically free, once it hits 1000 you can maybe think about selling a few shares.  

Cdad's picture

So you are a buyer.  Got it.

TheRideNeverEnds's picture

Well I went into earnings long some delta short a load of vol so yea.  I mostly just played for it to trade inside the expected move to the upside with a collapse in vol; so far so good. 


But seriously, FB going up was a given, it is an integral part of the social control matrix / data mining grid and it is run by a member of the tribe.  

i_call_you_my_base's picture

Every time I see "non-GAAP" I laugh at the phrase "non-generally accepted". Who the fuck comes up with that and how do people use it without laughing at how ridiculous that is?

NotApplicable's picture

I think you mean the generally accepted, non-generally accepted accounting procedure.

Who's laughing now?

TheFourthStooge-ing's picture

It's actually (non)GAAP. The hyphen is only there to make it look less mathlike.

(now obviously normalized) Grifting Accommodations, Abstractions, and Propaganda

ShrNfr's picture

FaceBook has ads? For me they don't. I have always been able to block them. Same with Twitshit.

NotApplicable's picture

But they have all these hot, busty, sex-crazed women in my area, THAT ALL WANT TO MEET ME!!!!1111!!

ParkAveFlasher's picture

My pecker is 12 inches long, non-GAAP.

Murf_DaSurf's picture



The President is on his way with Reggie to investigate this claim

icanhasbailout's picture

Guess which accounting gimmick-based number is FaceBook "valued" on.


Net present value of expected information sales to government black budget agencies?

economessed's picture

This is the proof we seek in validating that we can achieve prosperity as a country.  We don't need to make things, we can just update our facebook status.  One cat video comment can theoretically support a family of 4 for a month.

Kilgore Trout's picture

You're being ridiculous. It would have to be a funny or insightful cat video comment.

adr's picture

Remember, if you have Facebook installed on your phone and don't even open the app you are still counted as a user because some part of Facebook always runs in the background. Even if you delete the app your phone still has at least 20 other background applications that connect with Facebook.

The takeaway is that at least 50% of Facebook's claimed monthly users probably don't even look at the app. If you use your camera software to upload a picture, you count as connecting to Facebook and no ads were shown.

Facebook is the biggest publicly traded scam of them all, and there are a lot of big scams.

Duke Dog's picture

Totally convinced at this point that FB is a govt operation, along with Twitter, Apple, Google and everything related.

Never have, and never will, use any of that bullshit, willingly at least:)


adr's picture

The companies exist so billions of illicit dollars can be laundered cleanly through Wall Street. All that human trafficking, arms, drug, etc money has to go somewhere.

Then they get to use the profits from the Wall Street trades to buy more trafficked humans, guns, and drugs. The viscous cycle of the sociopath tribe that controls the world.

ReactionToClosedMinds's picture

new ADr .... you may know too much........ you may have to 'enroll' for MyRA sooner than you plan

Folks, without spilling too much here ...... a lot of the social media heritage (and more..... think 'search') resides/emanated from the former 'rocket cities' ...some of which were not on any maps of a certain european country.  When all illusions collapsed along with the default and Long Term Capital ......alot of intellectual talent had to scramble for livlihoods.  Some say the astute black program world scooped up alot of this talent on contract ...which led to much more

This is especially true with the subject of this analysis ....

Rearranging Deckchairs's picture

Not only that but I have noticed that my facebook mobile app seems desperate to get me on. I am now getting all kinds of notifications about innocuous stuff like birthdays etc to try and get me to launch it and "remain" active. I wonder how many of those users have serisouly started using it a lot less? It seems really desperate. I also know a good handful of people who have deleted their facebook accounts. 


Lendo's picture

Well put.  My thoughts exactly.

Duke Dog's picture

Who wrote this shit??? Why doesn't someone at ZH, who I love, do a simple down and dirty analysis of the 'real" GAAP" vs "non-GAAP" "BALANCE SHEET" of the Comercial Banks in the World, which will tell you what the Central Banks of the World are dealing with.

In all fairness, I know that ZH does know, but they also know that "Most" "Can't Handle the Truth".

Anyone with any sense at all would be putting every dime they have in something real, whether it be fucking farm land (which they will eventually take thru taxes), guns, bullets, food etc....

200 families/groups will win the battle, and the rest of us will lose our asses unless we don't play the game. Actually, we are all going to lose in the end - you cannot beat a psycopath(s) when they control you, because when they run the World, you have no place to go on this Earth. You only "Win" after you die.

adr's picture

Isn't it nice that finance exists in a world where using any measure of real financial work would show that just about every billion dollar company is actually bankrupt.

Oh, I can beat a psychopath. I have a few really nice baseball bats sitting around just for the occasion. Mice maple ones that will split in half leaving a nice sharp end to stab them through the heart when I am finally done.

dobermangang's picture

TSCO lowered 2014 guidance.  They've been one of the best retailers in the last decade.  Not a good sign for the retail sector when the quality companies start warning.

loregnum's picture

I like the average user figure for Canada and the U.S. The population of the two countries is what, around 350 million. So either every single person who may have set up a Facebook account (inluding many pre pubescent children apparently) at one time is active each month or maybe, just maybe, many of those alleged active users are dummy/fake accounts....or FB just pulls the user numbers out of their ass.  Nah, couldn't be that.

augustusgloop's picture

TWTR actually stands more likely to than FB. it's 1/4 mkt cap or less, but has become the lingua franca of social networking. FB closer to yahoo of yore. revenue model is stale. companies never last. blah blah. Besides, FB should be generating loads of cashflow based on its age, # of uses, etc.  A

Cashcollateral's picture

GAAP is a US convention and outdated in a modern context, particularly regarding its treatment of intellectual property, research and development costs, patents and intangibles. Which, for an internet company, is basically their entire business.

Non-GAAP typically refers to IFRS standard, which basically the entire world other than the US uses, and the US will be converting to within the next few years.

This is not to say that Facebook doesn't have a shitty, shitty business model and it won't explode costing everyone their investment, but when it does, it won't be because they were applying accounting magic, it'll be because their company just sucks.