Facebook’s stock gains 3% on Wednesday following the Q3 earnings report

Facebook’s stock gains 3% on Wednesday following the Q3 earnings report
Written by:
Michael Harris
31st October 2019
Updated: 11th March 2020
  • Facebook beats analysts estimates for revenue and earnings per share in the third quarter.
  • Susan Desmond-Hellmann resigns from Facebook’s Board of Directors.
  • Facebook's share prices were up 3% in the after-hours trading on Wednesday.
  • Facebook's stock has gained 44% in 2019 so far, twice as much as that of S&P 500 index.

The social media giant, Facebook Inc., announced its Q3 earnings report late on Wednesday. Highlighting better than expected figures for revenue and earnings, the stock was seen climbing up in the after-hours trading.

Comparison Of Estimates Vs. The Actual Figures

Facebook has beaten the Refinitiv’s estimates for revenue and earnings per share in the third quarter of 2019. The global financial markets data provider had forecasted $1.91 of earnings per share (EPS) for the social network while the revenue was estimated at $17.37 billion. According to the report, however, Facebook’s EPS has been noted at $2.12 with a remarkable increase in revenue to $17.65 billion. This marks a 29% growth in revenue as compared to the figure for last year. Q3 of 2019 is the third consecutive quarter for Facebook that has highlighted a growth rate of under 30% in revenue.

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The average revenue per user has been posted at $7.26 against the FactSet’s estimate of $7.09. Reported at $6.09 last year, the average revenue per user has raised by 19%. FactSet had also predicted daily and monthly active users on Facebook at 1.61 billion and 2.45 billion respectively, that are exactly in line with the figures of the earnings report.

Refinitiv has further added that the growth in revenue is likely to drop to 24% for Facebook in the fourth quarter. Dave Wehner, the current Chief Financial Officer at Facebook, has echoed a similar forecast and stated that a slight deceleration in growth can be expected in the next quarter. While Wehner expects the social media to be back on track in the year 2020, Refinitiv, on the other hand, expects the slowdown to penetrate further into the next year with the growth rate falling to around 22%.

Other noticeable figures accentuated in the earnings report include the revenue for mobile ads rising from 92% to 94% in the third quarter. The number of European users has increased from 286 million (Q2) to 288 million, while in North America, the number rose from 187 million users (Q2) to 189 million users.

Susan Desmond-Hellmann Resigns From Facebook’s Board Of Directors

Facebook has also declared independent director, Susan Desmond-Hellmann’s departure from the company’s board of directors effective immediately. Desmond-Hellmann stated that her responsibilities as the Chief Executive of Bill and Malinda Gates Foundation have been taking up most of her time and efforts, making it harder for her to do justice to her role as an independent director at Facebook without jeopardizing her health or personal life.

Facebook shares were seen trading 3% higher in after-hours trading on Wednesday (approaching $200 level). The stock has gained 44% in 2019 so far, that is twice as much as reported in S&P 500 (22%) as of Wednesday.

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