Facebook Stock Is a Deal After Avoiding a Coronavirus Earnings Disaster
Contrary to mounting fears, Facebook (NASDAQ: FB) ended up doing pretty well to kick off the first quarter of 2020. With the world getting upended by the coronavirus and the subsequent economic clampdown, the social media king reported surging average daily use and an 11% year-over-year increase in monthly active people on one of its services (Facebook, Instagram, WhatsApp, and Messenger) to 2.99 billion.
Of course, advertising takes a hit during a recession, and 98.3% of Facebook's $17.7 billion in revenue in Q1 were of the ad variety (the balance, mostly from Oculus virtual reality products, growing 80% from a year ago to $297 million). No surprise, then, that the ad revenue grew "only" 17%, suffering from a steep drop in spending in March.
CFO David Wehner reported last week that sales have since stabilized through the first three weeks of April and are on par with where they were a year ago. Still, Q2 and full-year 2020 guidance was pulled given the fast-changing and uncertain situation -- save for an operating expense outlay of $52 billion to $56 billion, up 16% at the midpoint from 2019. Operating expenses were already elevated as Facebook made security changes to its platform, so it's safe to assume profit margins are going to head in reverse for the balance of the year.
Source Fool.com
