Facebook Sinks After Confirming Ad Growth To Slow Down "Meaningfully"

Tyler Durden's picture

Update: If it was still a question in anyone's mind whether Facebook was really going to slow down ad revenue growth, it's not anymore. CFO Wehner was very clear in his comments.

Wehner is doubling down on the comments from last quarter that ad growth will come down "meaningfully.'' He's also maintaining the forecast of new spending of $7 billion to $7.5 billion this year, 50 percent more than last year.

 

*  *  *

It seems the machines were unprepared to handle the 'truth' as Facebook reported GAAP earnings of $1.04, stating that it will no longer report non-GAAP or adjusted earnings. This was a big beat of the 87c GAAP expectation but confused some looking at non-GAAP numbers notably higher (at $1.12). The initial drop in the stock was quickly erased once humans read the report, but is fading back towards lows.

Earnings beat...

  • *FACEBOOK 1Q EPS $1.04, GAAP EST. 87C (Adjusted EPS EST. $1.12)

Revenues beat...sequential drop but YoY big rise

  • *FACEBOOK 1Q REV. $8.03B, EST. $7.83B

Active Users beat..

  • *FACEBOOK 1Q MONTHLY ACTIVE USERS 1.94B , EST. 1.91B
  • *FACEBOOK 1Q DAILY ACTIVE USERS 1.28B , EST. 1.26B

 

The stocks dipped and bounced...

 

Perhaps theone area to note is the sequential drop in ARPU...

 

And Expenses as a % of revenues are on the rise..

One of the big takeaways last quarter was how Facebook was going to be spending more this year to build out its future business and its server capacity. It's certainly been spending already this year - CAPEX was $1.27 billion in the first quarter alone.

Bloomberg's gerrit De Vynck summarizes what we have so far:

  • Overall, the quarter was another positive one for Facebook, with beats on revenue, new users and GAAP EPS.
  • Mobile ads continue their march to taking over Facebook, comprising 85% of advertising revenue.
  • We're still in the dark on how much exactly Instagram is contributing to those numbers because Facebook has again decided to not break out financials for the photo-sharing app.
  • COO Sheryl Sandberg says in an interview that the firestorm of bad press around the prevalence of fake news and violent live videos on Facebook didn't hurt the company's revenue. That's all well and good for investors, but doesn't mean the problems are going away.
  • Shares are waffling up and down but aren't departing more than a percentage point or more from Facebook's closing price of $151.80.

The stock has turned back lower but remains in a narrow range.

“A great quarter, but what comes next?” said Rob Sanderson, analyst at MKM Partners. “We’re just kind of in this wait-and-see mode in terms of the impact on the business. We don’t know how much ad load has driven growth.”

As Bloomberg's Sarah Frier notes, there are two big things investors will want to know about today on the call:

  • Facebook said it would stop increasing the frequency of ads in news feed, sometime in the middle of this year. How much damage will that do to revenue growth?
  • Facebook says this is another investment year. Any adjustment to their spending forecasts?

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ZippyBananaPants's picture

Zippy don't see that in the price

JRobby's picture

Facebook it a POS

Insane the number of users. Just throw your checkbook, all your credit cards and your tax returns into the street and keep walking,

Its shit

Squid Viscous's picture

Suckerburglar has been laughing all the way to the bank, thanks to the momo tards and wall st. "analyst" whores

lester1's picture

PPT traders at 33 Liberty Street NYC are absolutely destroying the algos at hedge funds. Lol

cherry picker's picture

Remember that old adage.  don't say anything as it may be used against you.

Facebook stores everything true or false so it can be used against you.

ReZn8r's picture

Well FaceFuck can go fuck themselves because I have never used anything they offered.

I hope the shit falls so far off the face of the earthy that fuckerberg's intestines and complete insides are pulled out of him thru his asshole and then someone burns the pile of shit left over.

lakecity55's picture

Nah, too easy for the little Zionist Pig. Let's think of something more diabolical.

 

Squid Viscous's picture

how about a 1400 degree BBQ?

with some white corn and all the other fixin's

he'll only scream for like 5 seconds, but it will seem like 6 million for him

The Bell Rang's picture

Rising costs mixed with declining revenue per user = down........

debtor of last resort's picture

GAAP earnings means yawn earnings in Dutch. I kid you not. Most of the time i skip gaap posts.

A. Boaty's picture

Time for anti-social media with "Hate" buttons.

JRobby's picture

Now we are getting somewhere! Take it public at $2bil right during the run up to civil wars!

Deep Snorkeler's picture

Trying to Monetize Absurdity

1. 99% of internet ads are never seen by human eyeballs

2. 99.98% of all internet ads never receive one legitimate click.

3. 80% of all stock trades were never executed by a human.

Our economy is a fraud-bloated mirage.

Keep it going, it's all we have got.

Twee Surgeon's picture

Upvote for the clear, honest and obvious statistics. Phantom Economics. copyright 2017.

 

Kelley's picture

Long term Facebook will be a loser. 

Why? Because they treat their advertisers like nonexistent sh**. 

It takes Facebook two weeks to answer a service related question - if they answer it - and the answer is nonresponsive boilerplate to the question that was asked. 

pavman's picture

They get back to advertisers within a day, usually 4 hours.  Even had them change page ownership when a partner tried usurping our page for his new company after ripping us off.

Users are a different story.

AllStarInvestor's picture

Has anyone take a serious look at the claimed users numbers - at 2 bln, that's a material percentage of the entire world population...

 

Isn't it possible they fit the user numbers to a desired growth rate - soon they'll have more users than are living or have ever lived...Good Times.

aloha_snakbar's picture

I hope ZuckerPuppet gets cancer of the vagina...

Consuelo's picture

 

 

'Active Bots beat'

 

FIFY.

Consuelo's picture

 

 

Would anything of any real consequence happen to anyone, if Facebook went away tomorrow...?

blue51's picture

Millions of emergency room visits due to whiplash , from people suddenly looking straight ahead instead of down at their phone .

pavman's picture

Next to Google, they're the best bang for proverbial buck advertising-wise.  We get a ton of retail  customers from Facebook.  Have tou seen the scam that is local print advertising?  For every $31 a month spend, we net at least $300 in new subscriptions plus target marketing is great for our business.

 

I was and am still impressed with their power editor;  only thing I didn't like is shoving Instagram, down advertisers throats to get the same #s as pre-instagram.

TheSilentMajority's picture

Did they also confirm that 80%+ of their "MAU" are actually bots?

Twee Surgeon's picture

All my Facebook friends are Bots ! You don't like Bots or somethin ?  They love skydiving, fishing in the Bahamas and roller skating in bikinis. There aint nothin wrong with that.

Sokhmate's picture

Bots also love botsex; sex up the bot.

Snaffew's picture

I canceled my FB account 3 years ago and don't miss it at all...don't most people run FB with google chrome and ad block, so advertisers don't reach these users anyways.  perhaps advertisers are waking up to the fact that a dollar spent does not get any more than a 5 percent ROI.  FB will go the way of AOL.

American Snipper's picture

I have run so many ads on fakebook and ZERO results or sales. No more... Its also full of narsissists and attention whores who have to let you know the most intimate aspects of their lives.... And we quit posting vacation pics while on vacation, an open invitation to have your house robbed while you are far away. Except for trying to stay relevant in another business, yes, its zuckercrap...

Tonterias's picture

Buy the dip or you will miss it

Wayseer's picture
Can't wait for the movie they will make in 5 years showing the massive fraud that this thing is. If just one percent of the insider filth comes out it will make a great movie. Did I hear they are installing diving boards on top of all the facebook high rise offices?
Bay of Pigs's picture

That stock should be under ten bucks, not $150.

It's all complete bullshit.

Downtoolong's picture

 

I saw the movie “The Circle” today. I’d say it’s a must watch for everyone. It provides realistic examples of the moral hazard, cargo cult manipulation, elimination of privacy, and destruction of individualism by social media giants. Unfortunately, it feels a bit weak in detail in some areas, kind of like how “The Big Short” fell short on detail about the financial crisis in 2008. But my biggest complaint about the movie is that they cast an old guy, Tom Hanks, to play the part of Mark Zuckerberg. Maybe the producers were afraid of getting sued by Facebook for slander.

 

YHWH is greater's picture

Banning white supremacists cut their account numbers by 50 %

Navymugsy's picture

Die, fucking die, please die! Sick and tired of marketing companies posing as "tech"!!!!!!!!!!!!!!!

brooklinite8's picture

Zuck thought of selling FB for almost a billion dollars to Yahoo. He never thought this would amass 432.00 B dollar market cap. That is 431 Billion more than he expected. He under estimated the stupidity of the world. The price for one stupid act with no value is 432billion. I didn't even start talking about the actual device called Iphone.

zagzigga's picture

What "sinks"? Same time next year it will be well over $200. No, I am not a fan of FB, nor invested in it. Just calling it as I see it.