Shares of Facebook Inc. (FB, Financial), a major social media platform, soared over 6% in aftermarket trading despite reporting its slowest quarterly revenue growth since its 2012 initial public offering.
For the quarter ending June 30, the Menlo Park, California-based company reported net income of $5.178 billion, or $1.80 in diluted earnings per share, compared with net income of $2.616 billion, or 91 cents in diluted earnings per share, in the prior-year quarter. Revenues came in at $18.321 billion, outperforming the Refinitiv estimate of $17.4 billion but up just 10% from the prior-year quarter revenue of $16.624 billion.
Company accelerates daily and monthly average user growth despite coronavirus pandemic
Facebook CEO Mark Zuckerberg said in the company’s earnings release that it is proud to continue supporting businesses and individuals and allow them to “stay connected” when people are unable to meet in person. The social media platform reported 1.79 billion daily average users and 2.70 billion monthly average users as of June 30, outperforming the FactSet consensus estimates of 1.70 billion daily average users and 2.60 billion monthly average users. Both daily and monthly average users increased 12% year over year, driven by increased engagement as people around the globe sheltered in place and connected with people and organizations through products like Facebook, Instagram and WhatsApp.
Company updates revenue and earnings outlook
Facebook said that advertising revenue growth during the month of July was on par with the second quarter growth of 10%. The company also said it expects to maintain this 10% growth for the third quarter on several factors, including the normalization of community engagement as regions reopen and the pace of economic recovery.
Shares of Facebook soared over 6% on the back of Facebook’s better-than-expected revenue growth for the third quarter, outperforming the consensus estimate of 7.9% growth.
GuruFocus ranks Facebook’s financial strength 8 out of 10 and profitability 9 out of 10 on several positive investing signs, which include a double-digit Altman Z-score, an interest coverage ratio that outperforms 77.86% of global competitors and an operating margin that has increased approximately 0.1% per year on average over the past five years.
Gurus with large holdings in Facebook include Chase Coleman (Trades, Portfolio)’s Tiger Global Management and Pioneer Investments (Trades, Portfolio).
Disclosure: No positions.
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