Facebook
Inside the Numbers
In Q2, Facebook reported $3.61 in earnings per share which were significantly higher than expectations of $3.03 per share. Revenue also beat at $29.1 billion vs. a forecast of $27.9 billion. This was a 56% increase from last year's Q2 and marked the fastest growth since 2016 and an acceleration from 48% in the last quarter.
Daily active users were in line with expectations at 1.91 billion, while monthly active users slightly fell short at 2.9 billion vs expectations of 2.91 billion. In total, the company has 3.5 billion monthly users across all its apps which was an increase from 3.45 billion in the last quarter.
The average revenue per user was a standout at $10.12 vs expectations of $9.66. Driving this beat was a 47% increase in average ad price and a 6% increase in ad deliveries.
However, shares fell following the report as the company warned that it expects "year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth." The company's guidance for Q3 also fell short of analysts' expectations of $28.2 billion in revenue which would be a deceleration to 31% growth.
While the company's operations are quite profitable and successful, CEO Mark Zuckerberg is focused on the future, specifically the metaverse, which he sees as a virtual environment where people can engage with each other. Facebook plans to spend $5 billion on this project, and he believes that the company will evolve from being social media-centric to a metaverse company.
Stock Price Outlook
Facebook is one of the best-performing stocks in the market with a 31% YTD gain and 54% gain over the past year. Both are significantly better than the S&P 500
Recent weakness remains a buying opportunity as it has in the past. The company is one of the fastest-growing and most profitable companies in the world, and it's well-positioned to take advantage of future growth trends like VR.
