Facebook crushes analysts’ expectations in fourth quarter
Facebook smashed analysts’ expectations last Wednesday when it released fourth quarter earnings for 2017. The company delivered earnings per share of $2.21 against a consensus estimate of $1.95. It beat out revenue predictions of $12.55 billion and brought in $12.97 billion instead. Its average revenue per user came in at $6.18 for the quarter against expectations of $5.90 from Wall Street. When it came to active users, however, the analysts fared better, pegging Facebook’s actual results dead on: the company saw 1.4 billion daily active users and 2.13 billion monthly active users.
Facebook’s share price has gone up by 45% over the last 12 months
SOURCE: Yahoo Finance
Facebook’s success is stunning not just against analysts’ expectations, but also against its own performance a year ago. For reference sake, in the fourth quarter of 2016, Facebook saw earnings of $1.41 per share on revenues of $8.81 billion. the year-ago period.
An area that investors were worried about was the impact of “fixing” Facebook, which is predicted to be a drain on the company’s profit, and temporarily mute its growth. Mark Zuckerberg says this will make Facebook a better, stronger, social platform over the longer-term – ultimately, of course, this means it will be more competitive. The first of those impacts has already been felt.
Zuckerberg said: "Already last quarter, we made changes to show fewer viral videos to make sure people's time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day."
Ultimately, the fourth quarter was a fitting end to a year when Facebook has outperformed on every metric, yet faced a number of challenges over fake news and Russian political ads. Zuckerberg said: "2017 was a strong year for Facebook, but it was also a hard one.”
Dominion holds Facebook in its Global Trends Ecommerce Fund.
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