The Gap Betweeen GAAP And Non-GAAP In Two Charts

Tyler Durden's picture

By the magic of pure accounting gimmickry, one-off tom-foolery, non-GAAP shenanigans, and the sterling work of its now-retiring CFO; Facebook has 'managed' to produce twice as much non-GAAP net income as GAAP net income in the last 2 years...


Straight from the social horse's mouth, here is Facebook's Net Income on a GAAP and non-GAAP basis...


Which means, summed across the last 2 years, non-GAAP magic has created 100% more 'pretend' Net Income than real Net Income...


We are sure we do not need to tell you which one of these is used to "value" the company as "cheap"!

And yet is amazing how 'stable' Facebook has managed to keep its non-GAAP operating margins when the real GAAP margins have been so volatile...


But - as we told numerous times on mainstream media channels - you are not buying Facebook on valuations... you are buying growth (or the fact that there is another greater fool with no actual accounting skills willing to buy the stock $0.00001 higher than you are)...

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kaiserhoff's picture

There is a very simple explanation for this.


  Accountants favor reality.

  Economists divine chicken guts.

   Also, when someone goes tits up, the auditing firm gets sued.  Equal opportunity anyone?

KickIce's picture

An employer has an accounting opening and has narrowed the search to two applicants.  He calls both under the pretense that he will ask each only one question: What is 2 + 2.

The first applicant answers 4 and the interviewer thanks him for his time and tells him he has performed well through the entire hiring process.

The second applicant arrives for his interview and is asked the same question.  His answer; what do you want it to be?  He is now gainfully employed.

navy62802's picture


Spungo's picture

GAAP = reality
non-GAAP = CNBC's version of reality 

buzzsaw99's picture

the little maggot got his own jet airplane

the little maggot is a billionaire

hairball48's picture

"...Money for nothin' and chicks for free..."

:) Love that song

Goldilocks's picture

Dire Straits - Money For Nothing [subtitulado español] + lyrics (5:14)

hairball48's picture

And he was a lil "faggot" in the original recording


kaiserhoff's picture

  and no doubt still is;)

sixsigma cygnusatratus's picture

...and he was a millionaire in the original recording.  A million dollars doesn't go too far these days.  

Then again, MTV used to play music and was enjoyable back in those days...

Hindenburg...Oh Man's picture

There is no NON-GAAP result like a TESLA NON-GAAP result.

Would love to hear ZH's take on Apple's mechanizations include the 7-1 split. Obviously a laser-like focus on product development. 

NDXTrader's picture

I think it's pretty obvious they stuffed the hell out of the China channel. Why not, the first quarter of the deal they might as well send "extra" product. I think it was to cover up the fact that they missed the iPad # by 3 million - that's a shocking development. Also, from everything I've heard iPhone 6 might not hit until 2015. If true, then tomorrow will just be a gap to get the big boys out and unload on retail

kaiserhoff's picture

As my tax clients never learn, fucking with the inventory is a boomerang.  It returns next year to bite you in the ass.

Berspankme's picture

I hope Zuckerbergstein dies a horrible painful death. Nobody is more deserving than this .gov spy prick

Smegley Wanxalot's picture

I give non-GAAP a big LIKE because it's like so cool & shit.

NeedleDickTheBugFucker's picture

Zuckerberg is simply borrowing from the Jack Welch-GE playbook of the 1990s.  Amazing how Welch could deliver 15% compounded EPS with zero volatility.

Chuck Knoblauch's picture

I would like to see zit-boy Zuckerface manage GE!


Chuck Knoblauch's picture

FB's unrealistic forecasts would make a Calvinist thief like John Perkins blush.

Confessions of an Economic Hitman, by John Perkins (a great read on crooked accounting).


hairball48's picture

Maybe because of my advanced age...but I've never understood the Facebook "business model".

I realize younger generations use the internet and mobile devices far more than I do, but...What happens to Facebook if it is made essentially obsolete(or just "unpopular") by some new, as yet discovered, "technology". Technology is changing so fast these days.

And when this next financial shitstorm finally happens and the great "reset" begins--What will be the value of all these "social media" companies, including facebook? Will businesses still spend money advertising? Will the fickle public continue to use all these "social media" sites when they will struggle to buy bread?


Chuck Knoblauch's picture

You're confused because it's not a real business.

It's an over-hyped piece of software.

Government is using it to launder dirty money through the system.

The Accounting firm auditing this Chinese laundry is going bust.


It wont be Deloitte. 

I bet KPMG will be out of business in 3 years.

lasvegaspersona's picture


you are correct...we are too old to understand all this modern non GAAP stuff...we should just die and let the new wizards ply their their magic on this bright new era. Though your heir might like thr gold you left him.

hairball48's picture

Just die? :) Well the lil fuckers live in hope don't they? Hehe I'm spending it all!!

hairball(and Clyde the Raven)

MeelionDollerBogus's picture

Facebook became obsolete to me years go for 2 key reasons.

  1. I wanted to protect my privacy
  2. I wanted to discuss fraud in finance which includes Goldman Sachs & IPOs and that included the Goldman assisted IPO of facebook so they blocked me from further posting

"Will the fickle public continue to use all these "social media" sites when they will struggle to buy bread?"

EUREKA!! I'll start a new social media site called BREADBOOK showing rich people enjoying artisan-crafted breads with a fixed footer no matter what page you're on that has a video clip of Marie Antoinette smiling and saying "Let them eat cake!"

Hindenburg...Oh Man's picture

I've never seen the NASDAQ e-mini 100 juiced like this in the after hours. You'd think that the NASDAQ was only made up of APPL and nothing else. 

MeelionDollerBogus's picture


But in all seriousness , I'm hearing nonsense like kids needing to learn math in grade 3 and the concern being that the kids can't even read, actually read, to even comprehend what the question is to even answer it . Not just one child or two but all of them in a class . What the fuck?

This is the generation that will try to learn not to be slaves, or not to be robbed by rigged markets? Really?

I don't think so . That generation is going to grow up to be Wal-Mart greeters, graduating from the Costco school of Law if their dad can pull a few strings.

Hindenburg...Oh Man's picture

I didn't realize until tonight that the entire fucking NASDAQ is AAPL. 

Bernoulli's picture

Non-GAAP? What does this even mean???

Non-conforming to already lax and softened standards?

Well how about:

- My "non-traffic rules speed" was ok?

- This "non-criminal law crime" I committed was admissable?

- My "non-WADA values" of tested blood were clean?

- The "non-market price" of gold is low?

I can't handle this anymore. Probably part of the idea. Continue with the brainwashing until all the sane people stop their opposition to the system (break the resistance!) or until they go insane and freak out publicly (then we can easily declare them as crazy!).