
Facebook Q2 2018 Earnings - champagnepapi
https://investor.fb.com/investor-events/event-details/2018/Facebook-Q2-2018-Earnings/default.aspx
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jedberg
Market isn't happy. 25% drop in after hours trading.

It'll be interesting to see if it recovers tomorrow like Netflix did (which
then of course gave most of it back the next day again).

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tmalsburg2
Income at an all-time high, revenue doubled in the last two years, but
shareholders are unhappy? Could somebody please explain this to me?

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sago
The value perceived by shareholders is only partially related to the current
revenues. It is about perceived future value. And shareholders are right to be
spooked I think.

Revenues have grown 47% for only 11% in MAU. I don't hold shares in Facebook,
but combined with the feedback I hear from friends and family about Facebook
becoming increasingly ad-obsessed and devoid of valuable content, that would
make me very nervous too.

~~~
cgb223
Lets not forget that Facebook the company is not just Facebook the Website

They also own Instagram, Whatsapp, and a host of other massive online
properties

While Facebook dies, Instagram (seems anyway) to be thriving

~~~
lainga
Now, a bad idea for Instagram would be to couple it tightly to Facebook, so
that the demise of one drags down the other. Oh, wait...

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sushid
It's NOT coupled tightly at all. You don't need an FB account.

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samschooler
Looking at their average revenue per user. Even with the break down into
regions, US users (the most premium users according to the report) make
$25/year. I would easily pay $100/year for tracking free, advertising free
Facebook.

~~~
fortylove
I see people say things like this a lot on HN ("I would easily pay X for Y, if
it meant no advertising"), and I worry that we are a bit of a self selecting
population with the means for such things.

Imagine you have family with 4 kids. Are you actually going to spend $600/year
on facebook?

Also, I wonder if the people who _wouldn't_ pay for a subscription are just
quieter? And finally, would you really want to be on facebook if it lost half
of its user base because that half didn't want to pay?

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rainbowmverse
It's the "I'd buy that on a t-shirt" problem. People who say it don't usually
mean it, and the few who do aren't worth the trouble of making it available.

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propman
Why is it dropping by 25%? I’m buying after hours but it just wiped off 150B
in market cap over decent earnings. Beat eps, similar growth, slight dip in
Europe expected, no dip in Canada or US.

~~~
coralreef
Adjusted guidance for future growth, they expect revenue growth to slow down
significantly.

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adventured
It still makes zero sense, it's pure emotion. Unless the speculation is for
something far worse: a rapid plunge to negative growth (that doesn't appear
likely right now).

Microsoft is growing at about 1/3 the rate of Facebook, and with the FB shares
down 22% after hours (~$500b market cap), Microsoft has a real PE ratio at
least 1/3 higher. The same crazy contrast exists for Google, Amazon, Netflix.

This is an emotional mis-pricing by the market, just as the drop to $150x in
March was. I haven't bought after hours, but if the emotionalism continues
tomorrow, it's an easy buy on further weakness.

~~~
21
> It still makes zero sense, it's pure emotion.

It's pure machines.

These are event trading algos (event means news in trading lingo).

Anyway, if you believe it's a huge misprice, just go ahead and buy this
amazing opportunity.

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noncoml
> Monthly active users also didn’t grow compared to the first quarter and
> remained steady at 241 million in the U.S. and Canada

> Monthly active users shrank from the first quarter to 279 million from 282
> million in Europe.

Is this the beginning of the end?

~~~
martinald
Big problem with network effects is they tend to unwind just as aggressively
as they start.

WhatsApp is very popular amongst my social circles in Europe, but I don't
really know anyone who actively "uses FB" (as in posting content, actively
friend requesting new people etc). I am sure they are still counted in MAU
stats but are increasingly "zombie users", somewhat hooked on the addictive
properties and notification spam FB delivers rather than getting actual value,
which is unsustainable in the long run.

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rezashirazian
Facebook hasn't been the best for a long time. It's easy to get lost behind
rosy quarterly numbers and miss the forest for the trees. The platform has
been on a decline and it's starting to show in its numbers.

~~~
quanticle
There's a difference between decline and lack of growth. Facebook, at this
point, has most of the internet connected population of the world signed up.
That's a huge deal, and it means that even if Facebook MAU/DAU don't grow,
they're in a good place to grow revenue, just by being the de facto gatekeeper
for advertising going forward.

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danso
Yikes, in the few minutes that I first loaded this Marketwatch story about the
stock falling, $FB went from -19% to -24% in after-hours trading.
[https://www.marketwatch.com/story/facebook-stock-crushed-
aft...](https://www.marketwatch.com/story/facebook-stock-crushed-after-
revenue-user-growth-miss-2018-07-25)

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ejcx
It's amazing to me how volatile tech stocks are even today.

I remember buying Amazon and Netflix 5 years ago when each of them fell 33% on
an earnings miss and it has worked out really well buying on "miss".

~~~
nabla9
Even today??

They have years of profits and growth baked into their stock valuation.

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dartdartdart
Is there any information indicating the areas where they are increasing
headcount the most like Alphabet does? Does Apple release that information
too?

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oh-kumudo
Quite alarming, with the size of Facebook, the stock price could still suffer
such a huge fluctuation...

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vinchuco
What value does Facebook provide as a company? Do ads create value?

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jedberg
As a company they provide value to their customers, who are advertisers, by
delivering them prequalified leads.

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vinchuco
So they help people part with their money. Then, if I was an advertiser, I'd
put my money elsewhere:

> For example, while Google users click on the first advertisement for search
> results an average of 8% of the time (80,000 clicks for every one million
> searches), Facebook's users click on advertisements an average of 0.04% of
> the time (400 clicks for every one million pages).

[https://en.m.wikipedia.org/wiki/Facebook](https://en.m.wikipedia.org/wiki/Facebook)

~~~
Sujan
So? Advertisers pay per click or even sale, so they don't care the least how
many people "saw" their ad before that. Some agencies even sell this as a
"branding" side effect.

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slivym
It must be scaring the shit out of FB that their growth is stalled in the US &
receding in Europe. That can't look good for future revenue - essentially
makes any revenue growth in those regions extremely difficult and puts a head
wind on the entire company. This of course is reflected in their.... 1.3% jump
upwards in share price. Gotta love them shares.

~~~
kornish
1.3% jump today, but FB is trading down 25% after hours.

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joering2
+44% profit margin. They have so much room to shrink in terms of margins and
still make money!

If you do not own this stock you must be insane! *

Dislaimer: I'm long over $1MM since it was 2014 when it was at ~$59 and sold
30% at around $150 when stock crashed.

* I am not broker nor I advise you to buy or sell. Just stating my personal opinion.

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Zarath
I'd rather not lend my money to evil people.

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djohnston
may i ask what stocks you're backing?

