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FINANCIALS

Facebook Inc (FB) Posted Strong Q1 Driver By Growth In Online Advertisement

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User growth, gain in market share of online advertisements and monetization of previously untapped assets contributed to strong results

Facebook Inc. (NASDAQ:FB) posted Q1 earnings that conformed to analyst and investor expectations. Following the F8 conference, the analysts in general were very positive on the stock as the strategies and monetization policies introduced during the meet painted a very healthy long term growth story. The results will help the company gain investor trust and push for long term growth with investor consent.

The revenue for Q1 amounted to $5.38 billion beating the consensus of $5.25 billion with growth of 51.97% on y/y basis. The EPS amounted to $0.77 ahead of the consensus of $0.62 with 83.3% growth. Growth in mobile revenue was particularly strong and was reported at 76% y/y, while, the number of average daily users saw growth of 16.6%. The advertisement revenue growth was 63% exclusive of the Forex impact.

Raymond James analyst, Aaron Kessler expected Facebook to carry momentum from Q1 into Q2 with a healthy daily active user growth rate, continued increase in advertisement market share and increased monetization from Instagram and messenger. Facebook now has 1.65 billion global monthly active users showing growth of 14.8% y/y. The only negative thing for Facebook was softness in Oculus numbers which the company expects to decline further during 2016. The analyst remained largely positive on FB and raised his price target to $140.

Susquehanna analyst, Shyam Patil viewed the Q1 as another successful quarter for the company with excellent growth rates across the board. Facebook once again set the bar higher by beating fairly aggressive estimates. The operating expenditure is likely to grow by 50% during the latter half of the year owing to investments in core business and utility next generation services including WhatsApp, Messenger and Instagram. The analyst reiterated a positive rating on the stock and concluded his report with a PT raise to $145 from prior $140.

The analyst opinion for FB has 17 strong Buy, 29 Buy, three Hold and one Underperform. The stock price during the last pre market hour was $117.60.

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