Facebook posts astounding results
The stock price of Facebook surged more than 3% in after-hours trading, after posting better than expected quarterly results. The social media giant reported diluted earnings per share of $1.31 versus the estimates of $1.13, marking a 71% increase from the same period last year. Revenue was reported at $9.3 billion, which is 47% higher than a year ago.
The CFO of Facebook, David Wehner, said that ads are going to contribute less to growth in the following quarter. Facebook is looking to generate more revenue out if the news feed with Facebook TV – a long form video service is set to launch mid-August and ads placed in Facebook Messenger, messaging service with 1.2 billion daily users, is still in “early stages”.
The slowing ad revenue growth is something that the management of Facebook has been warning its investors for a year now. According to Wehner, the revenue generated by the ads placed in Messenger are not going to be able to fully offset the slowing growth elsewhere.
On a lighter note, algorithmic traders got very confused after Bloomberg released an incorrect earnings estimate, only to correct it moments later and see the stock surge. Click here to find more!
No voting rights – no party, FTSE Russell to Snap, Blue Apron and others
FTSE Russell delivered a blow to companies with no or very limited public voting rights shares in the market by announcing that the companies that fall under this criteria are going to be excluded from their equity indices. The move comes after an industry-wide outrage by institutional investors over SNAP’s move to IPO with shares that hold no voting rights.
The shares of SNAP are most definitely going to be affected by this decision, as it virtually eliminates the chance of institutional investors or big pension funds investing in the self-proclaimed “camera company” in the foreseeable future.
The newly announced requirements are the following: corporations must have at least 5% of the shares with voting rights held by the public. The new requirements apply to all companies, with those already in Russell indices having time until 2022 to adjust their capital structure.
SNAP isn’t the only company affected by the new measures, Blue Apron and many others are going to have to take action in order to be a part of the widely used indices.
Twitter reported its quarterly earnings earlier today. The star of the past reported revenue of $573.9 million, representing a 4.9% decrease year-over-year. The reported number did, however, handsomely beat the analysts’ estimate of $537.2 million.
Despite the top-line beat, Twitter did not deliver on the monthly active users metric, which came in at 328 million users, the same as in the prior quarter. The monthly active user metric is so important, because it gives the investors an idea about how the turnaround of the company is going in the long-term. No growth indicates that the company is stagnating, which in turn is the reason behind the stock shedding 9% in pre-market trading.
In efforts to reinvent itself, Twitter has started focusing on video, more specifically – live-event video content. Twitter has got promising partnerships in its pipeline, but some investors are skeptical about Twitter’s ability to deliver.
What else is there to say, the ball is in Twitter’s court, the future of the company depends on how well they are going to be able to play it.