so in this video here we're going to be
talking about Facebook stock I'm gonna
be doing an update on this stock here
they just recently reported very strong
earnings in my opinion and I'm gonna go
thoughts on some of these numbers as I'm
sure you know I am a facebook
shareholder I've talked about in the
past I'm very bullish on digital
advertising and particularly Facebook in
the long term and looking at the
valuation of this company and the
strength of that balance sheet and how
little debt this company has this seems
to me in my opinion to be such an
unbelievable opportunity right now for
shareholders you're getting a growth
stock that is basically being priced in
or priced at one of these sleeper stocks
one of these boring investments in the
stock market and it's a stock that still
has so much potential to grow the
revenue maybe not so much the user base
but the amount of revenue growth
potential for this company is absolutely
unbelievable but anyways that's what
we're gonna cover in this video is a bit
of an update here looking at this
earnings report now if you guys are
interested I have a link in the top of
the description below for weeble it is a
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some free stocks but anyways let's go
ahead and get into the details here and
talk about this earnings report and what
this means for facebook investors so
first of all one of the most interesting
parts of this commentary for me was this
line from Mark Zuckerberg where he says
here that more than 2 billion people use
at least one of our services one of
Facebook services every single day that
is just such a mind-blowing statistic
and I don't think we've realized how
massive this actually is so as of June
2018 they found out about 55 point one
percent
of the world population has internet
access if you don't have internet access
you are not even able to use you know
Facebook's services so you're not even
in their potential market you know you
can't even potentially be a customer of
Facebook so what I was curious about is
how many people that are able to use
Facebook that have internet access
actually are so we know the world
population is around seven point six
billion fifty five point one percent of
which are connected to the Internet that
means that about 4.2 billion people have
internet access and two billion of those
4.2 billion are using at least one of
Facebook services every single day just
let that sink in for a second how
massive Facebook has become that one in
two people basically just basically half
the population that's connected to the
Internet
uses at least one of their services
every single day that is unbelievable
how big Facebook has become and I know
there's all these people out there
saying you know Facebook's growth is
declining Facebook is dying out you know
Facebook's less popular than it was but
there is so much more to Facebook than
just the Facebook platform if all they
had was the Facebook platform I might
not be an investor in the stock but it's
largely because of Instagram and
whatsapp and all these other social
media platforms and services that they
own it's a very diversified collection
of incredible assets this company has
but anyways let's go ahead and go into
the numbers here they were able to be on
the bottom line here earnings per share
beat of a dollar seventy six versus a
dollar forty seven that was a massive
beat on earnings per share but top line
they missed out on revenue revenue
missed just slightly and I know a lot of
people were saying oh you know they
missed on revenue this was such a slight
miss it's unbelievable revenue came in a
thirteen point seven three billion
versus thirteen point seven eight
billion which is a very very small
margin of error their daily active users
came in at one point four nine billion
versus one point five one a very slight
miss their monthly active users followed
the same fashion came in at two point
two seven billion versus two point two
nine and then average revenue per user
came in right in line at
a lot of people were looking for a
blowout quarter but they've been dealing
with a lot right now in terms of coming
off of the Cambridge analytic estate a
scandal dealing with fake news dealing
with bullying on the platform so there's
a lot of stuff they're doing right now
to kind of improve the the user
interaction of the user experience with
the platform and that is very expensive
and a lot of that has involved increased
staffing requirements and you can see
here they mentioned on this report that
the headcount was actually up 45 percent
year-over-year so there's a huge number
of new employees at Facebook all of
which are on payroll you know they're
paying all these employees so they have
a lot more expenses with their
employment now and they're focusing on
other things outside of revenue in my
opinion right now revenue is not their
main focus they're they're focused on
other things involving the platform that
I mentioned earlier and they still had a
really really solid quarter here as far
as the revenue goes total revenue was up
33 percent year-over-year this stock is
still seeing such unbelievably explosive
growth for their valuation operating
income came in at 13% higher
year-over-year
net income up nine percent
year-over-year Erin's per share up 11%
year-over-year and even though this
company is as large as they are I cannot
believe that they're still able to grow
daily active users and monthly active
users like they are but daily active
users up nine percent year-over-year and
monthly active users up ten percent
year-over-year it's just unbelievable to
me that this company as big as they are
they're still able to deliver very solid
growth of their user base so that was
the details of the earnings report in my
opinion very strong earnings I'm
certainly happy as an investor I'm gonna
be buying more Facebook stock as soon as
I have the opportunity to with you know
some more cash to put into the market
but now let's go ahead and cover some of
the key points that were outlined in
some of the commentary going along with
this earnings report first of all they
said to expect increased expenses in
2019 much higher expenses they're
talking about maybe forty to fifty
percent higher expenses in 2019 than
they had in 2018 a lot of that has to do
with staffing requirements taking care
of some of these problems with their
platform it's going to involve more
people and more investment of
time and money so expect expenses to
increase by 40 to 50 percent in 2019
Facebook is investing heavily right now
in the Facebook watch platform Instagram
TV the Facebook marketplace as well as
cybersecurity and they are saying right
now that the trend the way things are
going and I'm very very sure this is
going to be the case as well as that
they're expecting to see more sharing on
the stories features of their Instagram
and Facebook platform well let's be
honest the Instagram platform I don't
know if anybody really uses Facebook
stories but there's going to be more
sharing on the stories feature than
there is on the feed that's where the
trend is going more people are using the
stories then are actually using the feed
and what is amazing to me as well as
they said that the stories is growing
faster than they can even keep up with
in terms of monetization it's growing so
fast for them they can't even build in
the back-end infrastructure to get ads
up there quick enough because of the
explosive growth they are experiencing
and they have not even touched they have
barely touched Instagram in terms of
monetization so as soon as they want to
turn on that profit engine they can just
start churning out cash from Instagram
tea or from Instagram and the stories
feature but right now in the short term
they're their number one goal is just to
you know have a funeral for snapchat and
they're doing a damn good job at it so
once once they've suffocated out
snapchat that's when they're gonna crank
up that revenue dial for Instagram and
one thing we noticed here as well the
last quarter for Facebook they had
talked about massive slowdown of revenue
possibly in the high single digits I
believe but we did not see that take
place here at all I believe they were
sandbagging a little bit here giving us
really really bad expectations or or
giving us the worst case scenario and it
was not anywhere near that so as far as
the doom and gloom from the last quarter
as far as what they were expecting we
certainly did not see that taking place
in this quarter okay so what are my
thoughts about this number one first of
all like I said it's amazing that a
company the size of Facebook is still
growing as fast as they are with pretty
much double-digit growth of their user
base over the last year you know
year-over-year from these quarters
second of all like I said I think
Instagram is having a funeral for
snapchat or they could pretty much have
one at this point they've really have
applicated out that platform and that is
their number one goal right now is just
to get rid of snapchat then they're
really gonna focus on you know
generating revenue from the Instagram
platform number three I expect to in the
short term maybe the next year or two to
see the Instagram user base begin to
surpass the Facebook user base I just
believe that is where the trend is going
number four I think this is a growth
stock priced as a sleeper right now it's
priced as one of these boring stock
market investments and it is so not
there's still an aggressive growth
company and there's so much potential
for this company to grow their revenue
and in the future I could see this being
a fantastic dividend stock when they
finally decide to just you know turn on
that switch make as much revenue as
possible and begin to pay out dividends
to shareholders if they decide to do
that because they generate so much cash
flow from their businesses and this is a
company with a p/e of 23.5 a forward p/e
of eighteen point four and a phe of one
point two four so when you compare this
to some of those other Fang valuations
this just seems like an unbelievable
value in my opinion compared to what
else is out there in the market and then
fifth and finally I think what we're
going to be seeing going forward is a
lot of growth in the average revenue per
user more so than we're gonna see daily
active users or monthly active users at
a certain point they're going to pretty
much achieve market saturation unless
there's a new social media platform
they're able to require or maybe the
Facebook watch or Instagram TV takes off
and they can steal market share from
YouTube at a certain point they're going
to achieve pretty much market saturation
and that's when they can just turn up
that profit dial and just you know
you'll see growth in average revenue per
user and they're just gonna start making
Bank even though they already are now
it's just gonna keep on growing so that
is my thoughts on Facebook and their
earnings report here that just came out
but anyways guys it's gonna wrap up this
video I hope you enjoyed it let me know
in the comments section below are you a
Facebook shareholder do you love this
company do you hate it do you think
Instagram is going to be bigger than
Facebook do you think it's going to be
the other way around let me know what
you guys think I would love to hear your
feedback and then like I said if you
guys are interested in signing up for
weeble you can get up to two free stocks
all those details are in the description
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be interested in but thank you so much
for watching this video I hope you
enjoyed it and I will see you in the
next one
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