Apr 24, 2019
Facebook's stock rose +9% after hours after another strong quarter across all core growth metrics.
This growth defied many of the bears who believed Facebook couldn't make significant investments in safety & security and continue to grow rapidly. But as COO Sheryl Sandberg put it on the Q1 earnings call, "we can do both."
Amid a constant stream of negative headlines throughout 2018, Facebook has managed to not only stay afloat but also to continue thriving with record revenue, user, and profit numbers.
Instagram continues to grow at a rapid clip, even as the core Facebook app's business slows. And beyond Instagram, the company is adapting its advertising model to the relatively new Stories format across its various apps, with strong early signs.
The company did take a $3 billion legal charge in Q1 for an FTC violation on privacy, as we explain below. However, excluding that charge (which many investors are doing), Facebook would have easily topped earnings estimates, which could explain the +9% after-hours move in the stock.
Long story short: Facebook is taking what has worked on Instagram and rolling it out across the Facebook family. So far, so good.
As Facebook drives growth across its family of apps (led by the Stories format), we think it will widen its network effects-driven moat and reward shareholders over time.
Cash Management
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