
Facebook shares shoot up after strong Q4 earnings despite data breach - deanmoriarty
https://techcrunch.com/2019/01/30/facebook-earnings-q4-2018/
======
pavlov
Facebook is a weird mass-market product because the average American tech
industry pundit has very little visibility into how it’s actually used around
the world.

Take Facebook Watch. Ask a journalist or HN commenter, and they’ll tell you
that it’s a content wasteland, a flop, a waste of investment. Here’s what
Zuckerberg said about Watch on the earnings call:

 _" There are now 400 million people who use it every month, and people spend
on average over 20 minutes on Watch daily."_

That’s a lot more monthly active users than Snapchat has — for a part of the
app which everyone automatically assumes to be a flop. That’s what global 2.3
billion users looks like: your local anecdata doesn’t tell anything.

~~~
eanzenberg
I was super impressed on the recommendations from FB watch where I just kept
it auto-playing the next and the next video. Their tech isn't as good, their
videos are choppier than youtube and netflix, but their recommendations were
insanely good.

~~~
danso
I wonder how much of that has to do with how much FB knows about you and your
interests, and your friends and their interests? With YouTube, I honestly
don't get any sense that it uses what Google surely knows of me via Search and
GMail, e.g. anything related to Chicago, or germane to my political
inclinations or personality. Instead, it seems wholly based on my viewing
history. Which has some benefits, of course (I get what I click on), except
when it makes inferences on outlier activity. e.g. if I click-through to a
flat earth conspiracy video for a few curious laughs, it naively thinks I must
have an appetite for more.

~~~
pawelk
> e.g. if I click-through to a flat earth conspiracy video for a few curious
> laughs, it naively thinks I must have an appetite for more.

Every time I'm about to click on a youtube link / watch an embedded video I
ask myself if it's worth influencing my future recommendations - which are not
great, but not too far off either. If the content is outside my core interests
or music tastes I opt to watch in incognito mode.

I once made the mistake to play Peppa the Pig for my daughter while signed in,
and my recommendations became a mess for weeks.

~~~
speedplane
> Every time I'm about to click on a youtube link / watch an embedded video I
> ask myself if it's worth influencing my future recommendations

I do this all the time. Often, I click on "smart" videos, which I have no
intention of watching just in the hope I get better quality content in my
"feed". But it's hard to find high quality content, yet it's easy to find
mindless dribble.

~~~
aylmao
> it's hard to find high quality content, yet it's easy to find mindless
> dribble.

+1 to this. I watched a few Super Smash Bros Ultimate compilations at around
the time it was released, and got some recommendations. I don't own a Switch
so I don't know the game, plus its a novelty, so they caught my curiosity.

I went down a such rabbit-hole of mindless dribble --endless videos of
videogame characters punching each other-- I actually tired myself and am no
longer considering buying the game/console. It's such mindless consumption.

> Often, I click on "smart" videos, which I have no intention of watching just
> in the hope I get better quality content in my "feed".

I need to try this.

------
chollida1
Pre: \- still 30% off highs

Numbers:

\- 4Q EPS $2.38, Est. $2.18

\- 4Q Rev. $16.91B, Est. $16.39B

\- 4Q Mobile Ad Rev. as % Ad Rev. 93%

\- Mobile represents 93% of ad revenue. Mark doesn't get enough credit for his
big switch to mobile,

\- Cost of revenue up 74 percent year over year

\- Operating costs went up by 60%, Note this is more than their growth rate,
really the only concerning thing from a good quarter

\- Annual capex is $13.9 billion, pretty close to what Microsoft spends

\- CFO is talking about phasing out Facebook only numbers and just disclosing
total numbers(Insta, WhatsApp, and FB rolled into one)

-

Users:

\- 4Q MAU 2.32B, Est. 2.32B

\- 4Q DAU 1.52B, Est. 1.51B

\- DAU up in Europe for first time in 2-3 quarters, Flat in North America

\- instagram stories has 500M DAU

Misc:

\- Headcount was 35,587 at year end. Increase of 42% for the year!!

\- shares back up to Oct levels,

\- turns out the markets like companies who can mint money and both users and
advertisers just don't care at all about facebooks scandals

\-
[https://investor.fb.com/files/doc_financials/2018/Q4/Q4-2018...](https://investor.fb.com/files/doc_financials/2018/Q4/Q4-2018-Earnings-
Presentation.pdf)

\- more after hours trading than alot of stocks get during the entire day

\- Zuckerberg saying that messaging growing faster than any other area. It
will become more central to the social experience on Facebook's apps.

~~~
panabee
thanks for this and other breakdowns. what was the primary driver for
operating costs rising so much?

~~~
porpoisely
I'm guessing most of increase are the "moderators/censors" the media and
political groups pressured them to hire. The same thing happened with google a
couple of years ago when they were forced to hire thousands of people to
moderate/censor content.

------
adpirz
It’s hard not to look at this performance and take away from it that most
people really don’t care about privacy. As upsetting as the thought may be to
some, Mark’s hypothesis that privacy is no longer a social norm we value seems
to be proven more and more right. Despite all the scandals and hearings, their
DAU are more than the population of the largest countries on Earth. Short of
serious legislation, what slows them down? Negative press seems to be nothing
but pebbles thrown at steamroller...

~~~
cm2012
Since there's no real life downside to FB using your data to show you more
relevant ads, people are making the rational trade-off. Privacy issues with FB
are ideology based in nature.

~~~
Barrin92
There is research being done on targeted advertisement, and apart from the
obvious effect of altering your behaviour and your attention, there has been
research shown that it can go as far as changing self-perception.[1]

So to claim that there is no downside to targeted marketing is simply false.
We have very little understanding what sort of effects it has on consumers,
and as far as we know they're not all good.

There is no reason to believe any deliberation on part of consumers here is
rational. The relationship between self harm and social media usage in
adolescents are well documented as well.

So it is quite ironic to assert that being concerned about facebook's
behaviour is 'ideological', when in fact advocates seem to willfully ignore
evidence that suggests that we're playing dice with people's psychology here.

[1][https://hbr.org/2016/04/targeted-ads-dont-just-make-you-
more...](https://hbr.org/2016/04/targeted-ads-dont-just-make-you-more-likely-
to-buy-they-can-change-how-you-think-about-yourself)

~~~
mevile
Fair enough, but it's up to each individual to learn about these details and
then make a decision if they still want to use Facebook. The media is doing
their job reporting on this, and everyone else can learn from this and decide
that hey, maybe using Facebook products are not worth the harm. Or maybe they
are fine with it and like the relevant ads and continue to use Facebook.

If social media makes you unhappy just stop using it.

~~~
felix_nagaand
Just like how it's up to each individual to decide whether they want to be a
heroin a addict.

~~~
chillacy
If you attribute so little agency to people that becoming a heroin addict
becomes someone else's responsibility (barring physical addiction in the womb
or being shot up at gunpoint repeatedly) then there's little in this world
that we can control anyways.

~~~
rtikulit
Your conclusion is entirely consistent with the facts. There is little in this
world that we can control. It's really important to stop the bad actors from
taking the little away from us.

~~~
chillacy
Curiously, what is that little we can control? One could come up with an
argument about how we control exactly zero in life. However even if it's true
in a way, it might not be so useful to believe that since having that belief
will lead to worse decisions (and a lot of psychology research shows that a
belief that you don't have control is highly correlated with depression).

------
djsumdog
Facebook is the only way a lot of people have to contact one another. I feel
like only celebrities deleted FB accounts during the whole #DeleteFacebook
thing. Furthermore, I think a lot of that campaign (and be honest, it was not
organic. It was a purposeful campaign by news and media giants in an attempt
to show they still dominated the minds of people in the world) was a battle of
the old rich vs the nouveau riche as Gatsby would say.

I wrote more about this last year, specifically focusing on Zuckerberg's
rumors of eyeing the presidency:

[https://fightthefuture.org/article/facebook-politics-and-
orw...](https://fightthefuture.org/article/facebook-politics-and-
orwells-24-7-hate/)

~~~
mjfl
> I feel like only celebrities deleted FB accounts during the whole
> #DeleteFacebook thing.

and after they deleted facebook, they went on their Instagrams.

------
m0zg
I hope this will pierce the HN anti-FB bubble somewhat. It's dangerous to
believe one's own BS. FB is here to stay, although I do believe it will wither
in the long term (5+ years).

~~~
trophycase
It's really not a HN bubble. Facebook the site/app has peaked for the most
part, both people I know who are currently in high school do not use it and
have never made a "Facebook" page. Now Instagram is a completely different
story of course.

~~~
m0zg
I happen to have a son who is currently is high school. While it is true that
he (and likely his peers) is not a heavy user of FB, he does use it to
coordinate events, and he does use Instagram and WhatsApp a lot. "FB" is not
just "FB the site". If you listen to their earnings calls, a lot of time is
devoted to Instagram in particular at the moment.

------
AndrewKemendo
Until this metric materially changes for the negative, nothing else with
Facebook will change.

------
ProfessorLayton
While a good quarter for FB despite all the scandals, reporters have pointed
out that there's potentially a lot of lag between Ad spend and user growth:
[https://twitter.com/MikeIsaac/status/1090726978271903744](https://twitter.com/MikeIsaac/status/1090726978271903744)

~~~
chillacy
But then later in the thread:

[https://twitter.com/EvanMcPhee/status/1090727957725818881](https://twitter.com/EvanMcPhee/status/1090727957725818881)

[https://twitter.com/HenryInnis/status/1090730656009617408](https://twitter.com/HenryInnis/status/1090730656009617408)

Past success no guarantee of future returns of course.

------
nodesocket
Just continues to show, privacy issues don't matter to companies because it
doesn't affect profitability and the stock price. Even with barrage of
constant #deletefb and "I deleted my facebook" posts, it didn't actually
matter. Essentially no change to daily active users and advertising revenue.

~~~
yumraj
Yes, that is why you need regulation to drive change.

~~~
nzbahz
So your point is that people must care about it, and if they don't it doesn't
matter because we'll take away Facebook anyway?

~~~
yumraj
If we went by majority and popular opinion all the time there would still be
slavery, segregation would still be a thing, same-sex marriages would be
illegal, there would be no abortion rights and so and so forth.

~~~
yihsiu
I'm not sure about this. At least for the same-sex marriage, seems that
majority in US approves it in recent years. I don't think a regulation can or
should make that kind of change while like 80% people don't agree with it.

------
ardy42
> Facebook’s daily to monthly user ratio, or stickiness, held firm at 66
> percent where it’s stayed for years, showing those still on Facebook aren’t
> using it much less.

What are the precise definitions of daily and monthly active users? To be a
daily user, do you literally have to use Facebook every day for a month?

~~~
rdiddly
No, it's just the number of users who used it that day, no matter what each of
them did on previous or subsequent days.

~~~
mbell
I am curious what 'used' means. e.g. Does logging into a third party service
via facebook login count as 'used' since you technically hit their servers?

~~~
chillacy
No, if it were that tangential, investors wouldn't be reporting it and using
it to make buying / selling decisions.

~~~
mbell
I think you overestimate how deep investors dig. I did find this from a few
years ago which contains a bunch of rather fuzzy language:
[https://www.adweek.com/digital/monthly-active-users-
definiti...](https://www.adweek.com/digital/monthly-active-users-definition-
revised/)

My interpretation of that would be that if, prior to that change, you logged
to spotify with facebook and didn't uncheck the 'share' button you would have
been counted, but after you would not have been.

I do find it rather curious that they simply count any user that logs in and
'visited' facebook. i.e. that no 'actions' need to take place or there isn't
any metric for time on site required. Seems rather easy to game that number by
just not going after bot accounts.

~~~
chillacy
True, numbers can be gamed.

But at the end of the day there's one number that matters: people click ads
and buy products -> companies buy ads and pay fees. And it's been going up
steadily for the past decade.

If you strongly believe that you've found an inefficiency in the market please
feel free to short FB.

------
Shinobi881
Facebook is taking the opportunity to air some of their dirty laundry. They
realize that it takes quite a bit for users to abandon the platform and are
probably strategically, leaking some of this stuff.

~~~
mcintyre1994
What stuff are you refering to? They have to report earnings figures, they're
a public company. And since they answer to investors they're going to share
these stats that put them in a good light.

------
andy_ppp
Facebook is kind of like smoking; we all know the company makes you ill but
there is plenty of cash to be made doing that.

------
tanilama
I am happy that Facebook endure this organized media smearing attacks. It is
very obvious to me someone wants to shape a narrative against Facebook, and it
is distasteful to dress such intention under an altruistic disguise, like
destroying Facebook could save the mankind. Utter nonsense.

------
tgb29
The media bias against Facebook has become outrageous and it worsened after
the establishment in DC extended their witch hunt and made Facebook the
scapegoat for the 2016 election.

------
deegles
I’m growing more and more convinced that the only real way for employees to
enact real change at their company is for them to become a significant, united
group of shareholders and force changes from the top. Unions sure as hell
aren’t being encouraged. Unfortunately this would not work in Facebook since
Zuck still has a controlling interest but it might work for others. Does that
make sense?

~~~
jalgos_eminator
I'm afraid that this is just how capitalism works. People have to vote with
their dollars, and right now they are voting for Facebook.

~~~
trophycase
They aren't even voting for Facebook with their dollars. FB/Insta is something
they use for free and they are "way too smart" to be affected by advertising
because they "see ads all the time and don't want to run out and buy the
product"

------
cityzen
The only thing that bothers me about Facebook anymore is the realization that
I live on a planet with, literally, billions of people that do not care about
their privacy.

------
justapassenger
What data breach? Is this talking about CA? That was like two-three earnings
ago? That’s pretty click-baity title.

------
strikelaserclaw
In this era, the deeper you are able to see past the b.s that you are
bombarded with, the more you will understand. Facebook has been bombarded with
negative publicity for almost a year now, if you look past these articles, you
will see that Facebook has not taken any sort of hit at all. Go see what the
average person is like and you will understand why this is the case (This is
also true for Donald Trump winning the election). We tech people live in a
bubble.

------
michelb
So the question might be; is Facebook too big to fail?

------
randomsearch
Couple of points people are missing:

\- The biggest problem with Facebook in terms of immediate impact is not loss
of privacy, though that’s real. It’s behavioural manipulation, which has lots
of very negative outcomes for you as a user as well as society. Don’t think
you’re not been manipulated, you are, and you are susceptible to it. Your
behaviour and emotions are negatively impacted by the fact you use facebook.

\- This is not “capitalism” or “consumer voting with their money”. Firstly,
due to network effects Facebook has a monopoly on their kind of product. The
choice is Facebook vs no facebook. Second, the currency is time and attention
to sell ads. Finally, most people are addicted to social media by design and
it’s arguable whether they have a truly free choice. Is a gambling addict
voting with their feet? The gambling addict knows they won’t win and usually
knows they’re addicted; social media addicts people very subtly and
manipulates you over time. Few people would admit to being addicted, but if
you really think you’re not - fine, if it’s no big deal then just take a month
off from social media and see what happens.

Good summary is Jaron Lanier’s interview
[https://youtu.be/kc_Jq42Og7Q](https://youtu.be/kc_Jq42Og7Q)

------
randomsearch
Or... Zuckerberg is lying.

You certainly can’t treat anything he says as ground truth - you need
independent figures.

~~~
dymk
You honestly think that Facebook is lying to investors about key metrics?

Do you know how much of a field day of litigation the SEC would have if that
were true?

~~~
huac
they've lied about metrics before:
[https://www.theverge.com/2018/10/17/17989712/facebook-
inaccu...](https://www.theverge.com/2018/10/17/17989712/facebook-inaccurate-
video-metrics-inflation-lawsuit)

------
nerdface
The whole market is up due to today's announcement of interest rates remaining
the same, not any unique announcement to Facebook.

~~~
Panini_Jones
.. Are you serious?

~~~
nerdface
Do you not look at facts backed by data? The whole market is up as of today.
Heck, read the news: [https://www.wsj.com/articles/global-stocks-waver-ahead-
of-th...](https://www.wsj.com/articles/global-stocks-waver-ahead-of-the-
fed-11548839844)

The stock increase is _not_ unique to Facebook today. _ALL_ major tech stocks
are up today.

~~~
dymk
The NYSE composite index is up by 1%. DOW by 2%. NASDAQ by 2%.

Facebook is up 4% in-hours, and 12% in after-hours trading.

Do _you_ look at facts backed by data? FB is beating the market with a whip.

