- Facebook on Wednesday announced fourth-quarter results that beat on both the top and bottom lines.
- The tech giant also posted strong user metrics.
- Encouraged by Facebook’s strong earnings, many Wall Street analysts raised their price targets.
- Analysts noted Facebook will attract advertisers sp long as users are not leaving the platform.
The tech giant earned $US2.38 a share, or $US0.20 more than what Wall Street analysts were expecting. It netted $US16.91 billion in revenue, topping the $US16.39 billion that was expected.
Facebook also proved it was able to keep users, totaling 1.523 billion daily active users in December 2018, while analysts were expecting 1.51 billion. It had 2.32 billion monthly active users as of December 31, 2018, in line with the Wall Street consensus.
The social-media platform added that its family of services – including Facebook, WhatsApp, Instagram, and Messenger – now have around more than 2 billion daily active users and over 2.7 billion monthly active users.
Facebook’s strong user metrics impressed analysts across Wall Street, prompting them to raise their price targets. They said as long as users aren’t leaving the platform, Facebook will remain attractive to advertisers.
Here’s what analysts are saying about the results:
JP Morgan — ‘Facebook is in rarefied air across the combination of scale, growth, and profitability’
Price target: $US210 (from $US195)
“We believe it is still early in the development of Facebook’s ad platform, including an ongoing improvement in ad targetability and measurement as well as a shift toward ads with higher quality formats, which we believe will become increasingly valuable to advertisers.”
Morgan Stanley — ‘This story is starting to get good’
Price target: $US190 (from $US175)
RBC Capital Markets — ‘2.7 billion people can’t be wrong’
Price target: $US200 (from $US190)
Jefferies —’Don’t call it a comeback, FB has been here for years’
Price target: $US200 (from $US180)
SunTrust Robinson Humphrey — ‘A utility for users and advertisers’
Price target: $US210 (from $US200)
Macquarie Research — ‘26% of all humans on planet earth use a FB property every day’
Price target: $US195 (from $US190)
“The users are still there: 2.7b MAU and 2b DAU,” said Benjamin Schachter.
“In other words, 26% of all humans on planet earth use a FB property every day. Despite the horrific headlines over the past year, users are sticking with FB. This tells us that a significant percentage of humans find value in FB. As we have been saying since our original FB launch, as long as the users are there, FB can find ways to monetise. As long as FB continues to provide utility for users, we think it will continue to attract advertising dollars.”
Pivotal — ‘Longer-term concerns remain’
Price target: $US120 (from $US113)
“Advertising seems like the least of the company’s worries at this time (at least for now: conversations we have with marketers convey to us scrutiny of the platform is increasing, and the “limits to growth” argument we have made is still a significant negative issue most investors don’t fully account for). Costs for platform safety seem almost certain to cause ongoing margin erosion (probably more than the company anticipates beyond 2019) and capturing advertiser budgets that would otherwise go to premium video platforms will require substantially greater investments in premium content on Facebook’s part.”
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