Yahoo Finance Facebook: Earnings Catapult FB Stock to All-Time Highs
Social media giant Facebook (FB) crushed earnings, revenue and active user expectations on Wednesday, catapulting the stock as much as 7 percent higher as Facebook continued its already impressive winning streak and reached another all-time high.
Shares topped the $130 level for the first time in after-hours trading.
Going into the second-quarter earnings report, FB stock was up 30 percent in the last year and more than 17 percent in 2016, so shareholders will continue to enjoy big returns from the social media darling after another blowout quarter.
In sharp contrast to Twitter, which grew monthly active users (MAUs) by just 3 percent to 313 million, Facebook grew MAUs by 15 percent to 1.71 billion last quarter. That's roughly 23 percent of the world's population.
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Facebook adjusted earnings per share came in at 97 cents, up 94 percent from the same quarter last year. Revenue was up 59 percent to $6.44 billion. Mobile advertising revenue made up approximately 84 percent of overall revenue last quarter, up from 76 percent in the year-ago period.
Analysts were expecting Facebook to report EPS of 82 cents on revenue of $6.02 billion.
"This is a $350 billion company that continues to be able to grow at rates similar to much smaller more nimble technology companies," says Michael Palumbo, author of "Calculated Risk" and the founder of Third Millennium Trading. "At some point Facebook will reach a ceiling to growth that all large companies hit, but that ceiling is nowhere in sight."
Facebook has become one of the hottest names in the market in recent years as it gains ground on Alphabet (GOOG, GOOGL) as the go-to platform for mobile and digital advertising.
Facebook is the latest technology heavyweight to report earnings this week, following Apple (AAPL) and Twitter (TWTR), which both reported Tuesday. While Apple's earnings beat expectations and sent the stock soaring above $100 per share, Facebook rival Twitter deeply disappointed.
"Unlike Twitter, which as we saw yesterday is struggling across the board, Facebook is doing a nice job of maintaining its momentum, launching new products that connect with both users and advertisers, and they're monetizing them nicely," says James Gellert, CEO of Rapid Ratings, a financial health ratings firm.
Video is central to strategy. Video has been a major point of emphasis for Facebook over the last year, as it attempts to woo traditional TV advertisers to allocate larger chunks of their budget to web video. Alphabet, which owns YouTube, is Facebook's most formidable rival here, although Twitter is also gunning for those dollars and has struck streaming deals with the four major U.S. sports leagues.
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CEO Mark Zuckerberg made a point to highlight his company's focus on video in the news release. "We're particularly pleased with our progress in video as we move towards a world where video is at the heart of all our services," he said. Facebook Live has been an important part of that effort as the company strives to bring compelling, original, and timely content to its platform in order to keep users coming back.
Facebook Messenger, which finally hit 1 billion users, should also become more important to the company's strategy going forward, as Zuckerberg has said seriously monetizing Facebook's properties doesn't become a serious priority until the billion-user mark.
That said, Instagram isn't close to the billion-user mark -- it hit 500 million users in June -- but the company is starting to take steps to make that a cash cow as well.
The biggest mobile and video-based competitor that Facebook doesn't own is Snapchat, which Facebook attempted to buy in 2013 for $3 billion. Evan Spiegel, the co-founder of Snapchat, turned that deal down, and has since been richly rewarded. Snapchat's most recent funding round pegged its valuation around $18 billion.
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From the look of it, it seems FB stock will continue charging higher after its blowout Q2 earnings, and the company seems nearly unstoppable right now.
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