Facebook (FB) Beats Estimates, Relief Rally Ensues

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08:08:04 pm on October 23, 2012

There has been quite a bit of negative press surrounding Facebook and its stock since the day they announced they were going public.  Of course many of those concerns were valid as the company continues to find the best way to monetize its massive worldwide user base.

The stock has been hit hard in recent months, but after the bell tonight the stock is getting a healthy lift after the company beat analyst estimates by a hair on both the top and bottom lines.  FB reported a non GAAP EPS of .12/share which was ahead of the consensus analyst estimate of .11/share as well as the whisper number of .10/share.  On the revenue side, the company also reported just above the analyst estimate of 1.23B by reporting 1.26B.  So, while revenues increased 32% Q/Q, the EPS number is stagnant despite beating estimates.  I’ll call this a good quarter, not a great quarter with the after hours move a relief rally.  That relief rally will likely give some back which could create a nice longer term entry point coming out of a large base.

====> Get Your Daily Facebook Stock Analysis Here

Let’s take a look at a few of the highlights of the quarter:

* The company will continue to focus much of its effort on mobile and how to monetize that.  It appears they are succeeding with mobile ads which now account for nearly 15% of revenues.

* Monthly active users hit the 1 billion mark in the quarter.  60% of those users now on mobile devices and that number continues to increase rapidly.

* Launched Facebook Gifts, an easy way to send friend gifts from ecommerce partners.  This could be a healthy revenue driver.

* Closed Instagram acquisition – Instagram user base has grown from 27M to 100M since the acquisition.

* Excluding Forex changes, ad revenue increased 43% over the year ago quarter.

“As proud as I am that a billion people use Facebook (FB) each month, I’m also really happy that over 600 million people now share and connect on Facebook every month using mobile devices,” said Mark Zuckerberg, Facebook founder and CEO. “People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform. At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company.”

Technically, FB stock base been trying to find a bottom to a base for several months and the gap up move tomorrow morning may just be the beginning of a sustained move.  However, as mentioned above, I think the stock will pull off the morning highs and possibly retrace most of the move in the coming days which could very well offer a nice entry point.  This earnings report likely puts a floor under the stock at least for a few months.

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