Facebook Tumbles Then Surges As Algos React To "Fake" Earnings Estimate

Facebook first tumbled then jumped after reporting Q2 EPS of $1.32, which initially slammed the stock as much as 5% lower however, then jumped just as quickly when it emerged that Bloomberg had blasted a wrong EPS estimate, according to which the company had missed earnings of $1.38...

  • FACEBOOK 2Q EPS $1.32, EST. $1.38

... only to immediately correct itself, and release the correct consensus expectations, which was $1.13.

  • CORRECT: FACEBOOK 2Q EPS $1.32, EST. $1.13

The algo reaction is shown below:

Among the other results:

  • Q2 revenue of $9.32 billion, beating estimates of $9.20 billion
    • 2Q advertising rev. $9.16 billion
  • 2Q daily active users 1.32 billion, estimate 1.32 billion
  • 2Q monthly active users 2.01 billion, estimate 1.98 billion
  • 2Q mobile ad revenue as percentage of ad revenue 87%

The sales growth is “really based on increased engagement” on Facebook and Instagram, COO Sheryl Sandberg said.

Instagram also helped second-quarter sales climb 45 percent to $9.3 billion, Facebook said Wednesday in a statement. Analysts projected $9.2 billion. Mobile advertising generated 87% of the company’s total advertising revenue, an increase from 84% in the period a year earlier.

As Bloomberg details, Facebook’s social network, now with 2.01 billion monthly active users, is steadily driving sales at a faster pace than at other technology giants. That consistency, which executives have warned may not last, funds the company’s efforts in chat applications and virtual reality, which may take years to contribute meaningfully to revenue. To keep up growth, Facebook has been heavily investing in video.

“Facebook and Google are taking virtually all the growth in digital advertising - they’re the easiest place to spend your money,” said Brian Wieser, an analyst at Pivotal Research Group.

And here are the key charts from Facebook's results:

Daily Average Users:

Monthly Average Users:



Revenue by Geography:

Operating Margin: