Facebook Set For Strong Open After Impressive Q3

Facebook shrugged off scandals and regulatory woes announcing another strong quarter of financial results, beating expectations on both profits and revenue.

Facebook shrugged off scandals and regulatory woes announcing another strong quarter of financial results, beating expectations on both profits and revenue.

  • Revenue $17.65 billion +29% on same period a year ago vs $17.35 billion exp.
  • Profits $6.09 billion +19% on last year
  • Daily active users 1.62 billion +9% yoy vs 1.61 billion exp.
  • Monthly active users 2.45 billion +8% yoy vs 2.45 billion exp.

Facebook shares rallied 5% after hours trading to $198.01 following an impressive set of numbers. Whilst Facebook has many problems, attracting advertising revenue is not one of them. These results show that Facebook’s core business has emerged unscathed from the onslaught of scandals over the past two years.

Notably Facebook picked up 2 million users in each of its core US & Canada and Europe markets, after quarters of shrinkage, no growth or weak growth. Adding to the good news, average revenue per user also grew solidly across all markets. This bodes well for the tech giant’s ability to monetise the growth in these areas

Timing is everything
Facebook’s impressive earning were somewhat overshadowed by Twitter CEO Jack Dorsey announcing that it would ban all political ads. The move is in stark contrast to Mark Zuckerberg’s more relaxed approach to the spread of misinformation without fact checks. The move by Jack Dorsey will undoubtedly increase pressure on Facebook to up their game in this department. 
The headcount at Facebook continues to grow. Headcount increased 28% yoy. Content moderators are playing an increasingly important role as the push for transparency grows.

Facebook's public perception took some hits across the quarter as it contended with outages, regulatory concerns over its Libra project, with growing calls including from presidential candidates for the network to be broken up. 
Yet despite the negativity, users kept using, user growth increased, and ad revenue kept pouring in across the quarter. 

Facebook levels to watch:
On the daily chart technical indicators are bullish across the board. The stock is trading +4.4% out of hours. A break above 198 could open the door to resistance at 203 before 209. On the downside support is seen at 181.60 prior to 173.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.