Facebook Rises on Solid Earnings Win, at Least Initially

Facebook Inc. (NASDAQ: FB) reported its third-quarter financial results after the markets closed on Wednesday. The company had $1.09 in earnings per share (EPS) and $7.01 billion in revenue. Thomson Reuters had consensus estimates calling for $0.97 in EPS and $6.92 billion in revenue. The same period from last year had $0.57 in EPS and $4.5 billion in revenue.

During the quarter, Daily active users (DAUs) totaled 1.18 billion on average for September 2016, an increase of 17% year-over-year. Mobile DAUs were 1.09 billion on average for September 2016, an increase of 22%.

Monthly active users (MAUs) came out at 1.79 billion at the end of the quarter, an increase of 16% from the same period last year. Mobile MAUs were 1.66 billion, an increase of 20%.

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Apparently, Facebook is still kicking you know what on mobile ad dominance. Mobile advertising revenue represented 84% of advertising revenue for the third quarter of 2016, up from roughly 78% of advertising revenue.

On the books, Facebook’s cash and equivalents totaled $26.14 billion, versus $18.43 billion at the end of 2015.

Mark Zuckerberg, Facebook founder and CEO, is likely to say much more detail on the conference call. He commented only very briefly:

We had another good quarter. We’re making progress putting video first across our apps and executing our 10 year technology roadmap.

Facebook options traders were bracing for about a 5% earnings swing.

Shares of Facebook closed Wednesday down 1.7% at $127.26, with a consensus analyst price target of $156.76 and a 52-week trading range of $89.37 to $133.50.

Following the release of the earnings report, the stock was initially up 0.6% at $127.90 in the after-hours trading session before going slightly negative in the after-hours reaction. Until getting into the conference call and hearing the general commentary ahead investors should probably consider this reaction very tentative. In fact, it seems like unfinished business until hearing commentary from Zuckerberg and Sandberg.

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