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FB Stock Down 1% Today, Facebook Reports Better than Anticipated Q4 Earnings

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by Steve Muchoki · 3 min read
FB Stock Down 1% Today, Facebook Reports Better than Anticipated Q4 Earnings
Photo: Depositphotos

The recent dip in Facebook stock comes despite the company having reported better than anticipated earnings.

Facebook Inc (NASDAQ: FB) stock closed Thursday’s trading session at $265.00, down 2.62%. Meanwhile, the Facebook stock had dropped further 1.22% during Friday’s pre-market to trade around $261.78 after the company revealed its Q4 earnings report.

Despite having a profitable 2020, Facebook stock has been on the receiving end for the past few months. According to metrics provided by MarketWatch, the Facebook stock jumped approximately 31.25% last year, but have dropped approximately 2.99%, and 3.46% in the past one month and five days respectively.

Being a major American technology advanced company, Facebook is currently facing significant market uncertainties, particularly in its ad system. Notably, the company heavily relies on its ad system to generate revenue. However, the recent United States presidential election and the ongoing coronavirus pandemic have significantly impacted the company’s ability to collect revenue through the ad system.

Facebook Stock after Q4 Earnings Report

The recent dip in Facebook stock comes despite the company having reported better than anticipated revenue earnings. Facebook released its Q4 earnings result on Wednesday, thus giving Wall Street analysts a chance to critically review the company.

During the past three months, Facebook reported revenue of $28 billion against the anticipated $26.407 billion. Notably, the social media giant reported adjusted earnings per share of $3.88 against an estimate of $3.54.

Out of the total reported revenue, the Facebook ad section reported revenue of $27.19 billion against an estimate of $26.07 billion.

The better than anticipated revenue was made possible by the high number of daily active users, whereby the company recorded 1.84 billion active users against 1.828 billion. For the monthly active users, Facebook recorded a figure of approximately 2.8 billion against an estimate of 2.762 billion.

Forward, the company anticipates experiencing more turbulence majorly due to the ongoing coronavirus crisis and also other market uncertainties. “Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth,” the company said.

However, the company does not rule out that the market is recovering and things might turn out for the better. “As a result, we expect year-over-year growth rates in total revenue to remain stable or modestly accelerate sequentially in the first and second quarters of 2021. In the second half of the year, we will lap periods of increasingly strong growth, which will significantly pressure year-over-year growth rates,” Facebook said.

Facebook’s major hurdle remains the advertising sector with the rival Apple Inc (NASDAQ: AAPL). Apple’s IDFA changes have put pressure on the Facebook ad system structure and threaten to shrink it in the foreseeable future.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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