Earnings Release Is Facebook (FB) A Buy?

 

Facebook (Nasdaq: FB) today reported financial results for the quarter ended March 31, 2021. Facebook reported revenue of $26.1 billion in the first quarter, 48% more than the $17.7 billion more than analysts expected.

Net income also smashed record breaking expectations reaching $9.5 billion equivalent to $3.30 per share and nearly double income of $4.9 billion in the first quarter of last year.

 

“We had a strong quarter as we helped people stay connected and businesses grow,” said Mark Zuckerberg, Facebook founder and CEO. “We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas like augmented and virtual reality, commerce, and the creator economy.”

 

  Highlights

 

  • Facebook daily active users (DAUs) – DAUs were 88 billion on average for March 2021, an increase of 8% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 2.85 billion as of March 31, 2021, an increase of 10% year-over-year.
  • Family daily active people (DAP) – DAP was 72 billion on average for March 2021, an increase of 15% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.45 billion as of March 31, 2021, an increase of 15% year-over-year.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were

$4.42 billion for the first quarter of 2021.

  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $64.22 billion as of March 31, 2021.
  • Headcount – Headcount was 60,654 as of March 31, 2021, an increase of 26% year-over-year.

 

CFO Outlook Commentary

 

 

We are pleased with the strength of our advertising revenue growth in the first quarter of 2021, which was driven by a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered. We expect that advertising revenue growth will continue to be primarily driven by price during the rest of 2021.

 

We expect second quarter 2021 year-over-year total revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter of 2021 as we lap slower growth related to the pandemic during the second quarter of 2020. In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to significantly decelerate sequentially as we lap periods of increasingly strong growth. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently- launched iOS 14.5 update, which we expect to begin having an impact in the second quarter. This is factored into our outlook.

 

There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments, and like companies across a wide range of industries, we are closely monitoring the potential impact on our European operations as these developments progress.

 

We expect 2021 total expenses to be in the range of $70-73 billion, updated from our prior outlook of

$68-73 billion. Facebook year-over-year growth in expenses is driven by investments in technical and product talent, infrastructure, and consumer hardware-related costs. We remain committed to investing for long-term growth and our expense outlook reflects the underlying strength of our business and the compelling investment opportunities we see across our products, including consumer hardware.

 

We expect 2021 capital expenditures to be in the range of $19-21 billion, down from our prior estimate of $21-23 billion. Our capital expenditures are driven primarily by our investments in data centers, servers, network infrastructure, and office facilities.

 

We continue to expect our full-year 2021 tax rate to be in the high-teens.

 

Webcast and Conference Call Information

 

Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Facebook’s earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Facebook uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg’s Facebook Page (https://www.facebook.com/zuck) and Instagram account (https:// www.instagram.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

 

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (402) 977-9140 or +1 (800) 633-8284, conference ID 21993135.

 

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

 

About Facebook

 

Founded in 2004, Facebook’s mission is to give people the power to build community and bring the world closer together. People use Facebook’s apps and technologies to connect with friends and family, find communities and grow businesses.

CWEB Analyst’s have initiated a Buy Rating for  Facebook (Nasdaq: FB)  and potential upside of $800 in 2021.

 


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