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Are Privacy Jitters Hindering Facebook's (FB) Upside?
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Facebook, Inc.’s CEO Mark Zuckerberg testified in front of European lawmakers on Tuesday. Zuckerberg had to face a wide range of questions from members of the European Parliament regarding the company’s privacy policy. Interestingly, a lot of questions went unanswered. Clearly, the tide has yet not turned for Facebook, the going for which has not been that smooth over the last three months.
The company’s shares took a massive hit after it was accused of a data misuse scandal that affected the personal data of millions of users in March. However, the social media giant’s shares bounced back after its CEO Mark Zuckerberg testified in front of Congress. Also, its stock rallied on robust first-quarter earnings results.
That said, Facebook has been one of the best performing tech stocks over the last few years and a market driver along with other FAANG stocks, namely Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) , Netflix, Inc. (NFLX - Free Report) and Alphabet, Inc. (GOOGL - Free Report) . The company’s shares have increased 24.1% in the past year. Moreover, the company’s users continue to multiply despite the scandal, helping it to attract more ad revenues.
Zuckerberg Testifies In Front of EU Parliament
Zuckerberg testified in front of European lawmakers on Tuesday, facing a volley of questions revolving around the company’s privacy policy. The 34-year-old billionaire had earlier testified in front of American lawmakers, following which the company’s shared surged 4.5% on renewed investors’ confidence.
However, Zuckerberg this time had to face tougher questions, on how data of millions of users ended up in the hands of political consultancy firm, Cambridge Analytics. The testimony comes three days before the European Union’s rules on data protection come to effects. Interestingly, most of the questions remained unanswered this time, pushing the company’s 0.4% down on Tuesday.
However, despite all the recent odds, Facebook has been one of the best performing tech stocks in the past one month, with its shares increasing 15.1%. In contrast, Netflix, Amazon and Google have increased 8%, 8.3% and 5.2%, respectively, in the same time frame.
Price Performance of Facebook Vs. Peers
Facebook Rides High on User Growth, Ad Revenues
Shares of Facebook rose 5.4% on Apr 26, after the company reported robust first-quarter earnings results.
Robust ad revenues, which grew 50.1% year over year to $11.795 billion, and a 60% year-over-year surge in Mobile ad revenues to $10.7 billion helped the social media giant post impressive quarterly figures. The company posted revenues of $11.97 billion, beating the Zacks Consensus Estimate of $11.45 billion and surging 49% from the year-ago quarter.
Moreover, monthly active users (MAUs) were up 13% year over year to a staggering 2.20 billion at the end of the quarter. Daily active users (DAUs) were 1.45 billion, reflecting a 13% year-over-year increase. So ignoring all the backlash post the data misuse scandal, Facebook’s user base saw a whopping 7.4 million subscriber addition in the first quarter.
Facebook now has more than 6 million active advertisers and Instagram has 2 million. There are 80 million active SMBs on Facebook and 25 million on Instagram. Since reporting first-quarter results the Zacks Rank #3 (Hold) shares have surged 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Is Facebook Still Undervalued?
Facebook has gained 5% year to date, despite all the turmoil over the past three months. The biggest factor that goes in favor of the company is its valuation. Facebook has a PEG ratio of 0.91 that makes it cheaper than the S&P 500, which has a PEG ratio of 1.66.
Moreover, Facebook’s median PEG ratio over the last 12 months is 1.04. Additionally, it touched a peak PEG value of 1.24, which means that it remains undervalued and has further room to run.
Summing Up
Tech majors have delivered robust earnings performances for quite some time now, as was yet again confirmed by Facebook’s first-quarter results. Most importantly, for a company like Facebook that depends largely if not solely on user loyalty and ad revenues, a stupendous active user addition speaks volumes about its sustainable profitability.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Are Privacy Jitters Hindering Facebook's (FB) Upside?
Facebook, Inc.’s CEO Mark Zuckerberg testified in front of European lawmakers on Tuesday. Zuckerberg had to face a wide range of questions from members of the European Parliament regarding the company’s privacy policy. Interestingly, a lot of questions went unanswered. Clearly, the tide has yet not turned for Facebook, the going for which has not been that smooth over the last three months.
The company’s shares took a massive hit after it was accused of a data misuse scandal that affected the personal data of millions of users in March. However, the social media giant’s shares bounced back after its CEO Mark Zuckerberg testified in front of Congress. Also, its stock rallied on robust first-quarter earnings results.
That said, Facebook has been one of the best performing tech stocks over the last few years and a market driver along with other FAANG stocks, namely Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) , Netflix, Inc. (NFLX - Free Report) and Alphabet, Inc. (GOOGL - Free Report) . The company’s shares have increased 24.1% in the past year. Moreover, the company’s users continue to multiply despite the scandal, helping it to attract more ad revenues.
Zuckerberg Testifies In Front of EU Parliament
Zuckerberg testified in front of European lawmakers on Tuesday, facing a volley of questions revolving around the company’s privacy policy. The 34-year-old billionaire had earlier testified in front of American lawmakers, following which the company’s shared surged 4.5% on renewed investors’ confidence.
However, Zuckerberg this time had to face tougher questions, on how data of millions of users ended up in the hands of political consultancy firm, Cambridge Analytics. The testimony comes three days before the European Union’s rules on data protection come to effects. Interestingly, most of the questions remained unanswered this time, pushing the company’s 0.4% down on Tuesday.
However, despite all the recent odds, Facebook has been one of the best performing tech stocks in the past one month, with its shares increasing 15.1%. In contrast, Netflix, Amazon and Google have increased 8%, 8.3% and 5.2%, respectively, in the same time frame.
Price Performance of Facebook Vs. Peers
Facebook Rides High on User Growth, Ad Revenues
Shares of Facebook rose 5.4% on Apr 26, after the company reported robust first-quarter earnings results.
Robust ad revenues, which grew 50.1% year over year to $11.795 billion, and a 60% year-over-year surge in Mobile ad revenues to $10.7 billion helped the social media giant post impressive quarterly figures. The company posted revenues of $11.97 billion, beating the Zacks Consensus Estimate of $11.45 billion and surging 49% from the year-ago quarter.
Moreover, monthly active users (MAUs) were up 13% year over year to a staggering 2.20 billion at the end of the quarter. Daily active users (DAUs) were 1.45 billion, reflecting a 13% year-over-year increase. So ignoring all the backlash post the data misuse scandal, Facebook’s user base saw a whopping 7.4 million subscriber addition in the first quarter.
Facebook now has more than 6 million active advertisers and Instagram has 2 million. There are 80 million active SMBs on Facebook and 25 million on Instagram. Since reporting first-quarter results the Zacks Rank #3 (Hold) shares have surged 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Is Facebook Still Undervalued?
Facebook has gained 5% year to date, despite all the turmoil over the past three months. The biggest factor that goes in favor of the company is its valuation. Facebook has a PEG ratio of 0.91 that makes it cheaper than the S&P 500, which has a PEG ratio of 1.66.
Moreover, Facebook’s median PEG ratio over the last 12 months is 1.04. Additionally, it touched a peak PEG value of 1.24, which means that it remains undervalued and has further room to run.
Summing Up
Tech majors have delivered robust earnings performances for quite some time now, as was yet again confirmed by Facebook’s first-quarter results. Most importantly, for a company like Facebook that depends largely if not solely on user loyalty and ad revenues, a stupendous active user addition speaks volumes about its sustainable profitability.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>