Facebook on Tuesday reported revenue that missed Wall Street estimates and stalling user trends during the third quarter. Shares are up as investors had already prepared for even the worse.
The social-media giant earned $US1.76 a share, beating the $US1.47 that was expected by analysts, according. Its revenue grew 33% year-on-year to $US13.73 billion, but still missed the $US13.8 billion that was anticipated.
Meanwhile, Facebook said it had 1.49 billion and 2.27 billion worldwide daily and monthly active users, up from the 1.47 billion and 2.23 billion in the previous quarter. Notably, its daily average users in the US and Canada have flatlined since the Q1 2018 at 185 million.
The company also said it will invest more aggressively, and called for a 40- 50% operating expense growth in 2019 guidance.
Analysts across Wall Street were relieved that users didn’t flee the social network in droves after a string of scandals. But they have mixed opinions about Facebook’s long-term outlook.
Here’s what Wall Street is saying about the quarter:
Goldman Sachs — ‘Better than feared’
Price target: $US195 (from $US205)
“Management guided revenue growth to sequentially decline by mid to high single digit percentages, compared to last quarter when they guided revenue growth to decline by high-single digit percentages in both 3Q and 4Q.”
RBC Capital Markets — ‘Facebook still has many growth levers left to pull’
Price target: $US190 (from $US225)
Jefferies — ‘Not as spooky as feared, but ghosts remain’
Price target: $US200
He continued: “Facebook connects more than 2 billion people from around the world to nearly 6 million advertisers with best in class data and targeting capabilities delivering high quality and relevant advertising to its loyal userbase.”
Wedbush — ‘Shares remain in the dog house’
Price target: $US220 (from $US250)
Suntrust Robinson Humphrey —’We maintain a Buy rating’
“We remain constructive as we believe 1) FB’s user base/ engagement proved steady in the face of much head winds, 2) prioritisation of the user experience/safety should lead to better monetisation LT as marketers adopt the new ad products, 3) marketers continue to see superior ROI, 4) Stories seeing increasing levels of engagement, 5) our belief there is some conservatism in mgmt commentary, and 6) valuation remains compelling.”
Pivotal — ‘We see downside risks to operating expense relative to guidance’
Price target: $US125 (from $US131)
“We see downside risks to operating expense relative to guidance because of what we think are continuing systemic problems that manifest themselves through an underinvestment in operating resources and efforts to mitigate risks caused by the platform,” said Brian Wieser at Pivotal.
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