Facebook Reports First Quarter 2019 Results | Hacker News Reader

Facebook Reports First Quarter 2019 Results

investor.fb.com

83 pointsrunesoerensen38 comments

Over 200 (+10%) in the after-hours! https://www.google.com/search?q=NASDAQ:FB

While P/E ratio is back up to 24 (after December's low of 17) that's still way more conservative than their 70-80 range a chunk after IPO: https://www.macrotrends.net/stocks/charts/FB/facebook/pe-rat...

That says to me that the markets are pricing Facebook as a relatively well-characterized business at this point and don't see the likely fines as material to the business.

(Disclaimers: I own no shares or options of FB nor am I planning to acquire any. I am a former employee.)

Apple had a P/E ratio of something like 12-13 and then went on to more than double it’s stock price. Markets are not always very wise.

P/E ratios aren’t absolutes, they vary from industry to industry. Hardware companies have lower P/E ratios than software companies and Apple has traditionally been regarded as a hardware company.

Multiples like P/E are just a proxy for cash flows, discount rate, and growth. That P/E tends to stratify on industries makes sense not just because of growth, but also its sensitivity to capital structure. So asset heavy companies with lots of leverage will have different P/E ratios even with the same unlevered free cash flows.

A P/E ratio of 13 seems tiny. I remember when AMZN was over 1000.

Yeah, I remember too: that was when they had giant opportunities for growth. Lower P/E means lower opportunity for growth. Apple's growth prospects are fairly low on the current trajectory of the company. They were also fairly low when it was 13, regardless of what the stock price did.

Apple and FB have very different cap structures so let’s compare their EV/EBITDAs not P/E. FB is ~16 and AAPL is ~12. Much closer from that perspective.

I think that even didn't include their cash reserves.

Stupid question, aren't employees paid partly in stock?

Most are, but I assume the GP sold their stock, either while they were at FB or after they left.

At both Google and Facebook I elected the Autosale programs to immediately sell my company equity for cash and then immediately automatically reinvest the cash in an ETF portfolio (using Schwab Intelligent Portfolios). When autosale wasn't available I would habitually sell on the first open trading window day.

Why? Both of those stock have performed very well.

Because they perform well up until the point that they don't. By working at $Company, you're already invested heavily in their success. If a substantial portion of your net worth is also tied up in their stock, the company having problems may ruin you. Imagine: the stock price tanks due to some real issues, and then you get laid off. In one swoop you've lost both your salary and your savings.

If you'd instead sold some or all of your stock, you'd have a solid nest egg to fall back on. And companies doing very well up until the point that they suddenly explode is not exactly unheard of: consider Enron, or even Groupon or Zynga.

It's true that it's unlikely for FB to implode over the next year, but last year was real rough for the company: the July earnings went from 220 to ~160. If your whole savings is wrapped up in that, that's a scary drop. (You can say that it's recovered, but only partially and slowly).

Long story short: it's easy to pick the winners if you're looking backwards.

Risk. If you are an employee you are already have significant exposure to the risk of the business doing poorly, so it makes sense to diversify. Maybe frame it this way: if I handed you $20,000 to put in the stock market would you put it all in your employer's stock?

I am pretty surprised the price continues to rise with the never ending torrent of bad news regarding how nefarious FB is when it comes to privacy and exploiting their users. I guess this goes to show just how few people care at all about their privacy... really makes me worry for the future.

I was surprised too, but then I remembered that we live in a bubble. Privacy is only a highly-emphasized topic in niche places like HN. Most people couldn't care less about this, despite knowing the high level rhetoric.

> Most people couldn't care less about this,

Please stop saying things like this. Ironically, this is a "HN-ism". It is first a misunderstanding of people, and secondly a misunderstanding of privacy.

People care about their privacy when it comes up. Until people start being personally impacted, not much movement will happen. Saying "your facebook data was leaked to some analytics firm" is not going to trigger much panic. Saying "your credit card was stolen by hackers" would, which is why people reacted much more voraciously to the Target breach, than Facebook.

This is not hn-ism, multiple studies such as Viber study, Stanford study by Athey et al have proven than less than 1 in 4 people care about privacy. Even within those who care, vary few can resist small reward in exchange for divulging valuable personal data. In Stanford study, for example, vast majority of students were willing to give out their friend's email addresses for a pizza. I recently visited car dealer where they asked for SSN and my annual income before finalizing purchase and I asked them why they need that information. The person looked at me as if I was the first person to question that.

That example causes panic because there’s an immediate major financial threat (yes, those charges can be reversed, but it’s still scary)

A better comparison would be something like “that hotel you spent a week in has a hidden shower camera and an employee has been found secretly spying on guests”

I think your better comparison has reinforced my point that maybe I didn't convey clearly: If that secret spying doesn't cause any material harm to the individual, they are less likely to respond. Maybe some minor outrage of course, and some expressed displeasure for it to discontinue. Besides, going off of your hotel example, I imagine that if you explained to a Facebook group of parents that hey those videos you are all sharing of your little ones are being exposed to peeping Toms, you'd have a nice little outpouring of outrage.

Part of this is also the complete and utter failure of good journalism on tech issues. This is HN, we are all technologists here right? How many times have you read a NYT, WaPo, or some of the newer "media" like HuffPo reporting on some tech only to facepalm at the number of woeful inaccuracies and misrepresentation of the facts or situation, yet we are to trust them to report on complex privacy and security issues effectively? It's Gell-Mann amnesia over and over again.

Hang out with teenagers, or even 20 somethings, for just a little while, and you'll see that privacy means nothing to them. The youngest kids are a little better, sticking to Snapchat over Facebook and Instagram (because the messages are "temporary"). But for example, when a friend of mine got into college, she posted on Facebook, "just got checked in!" along with a picture of her school ID, her room key, and the form with the room number. I told her that someone could easily get into her room with that one photo, but she didn't care.

> privacy means nothing to them

This is a blanket statement. I’m not convinced the rate of people who don’t care about their privacy varies significantly with age.

I cared a lot about privacy from my younger teen years 20 years ago while non of my friends did. If you dont understand anything about the data its all noise to you.

Youngest kids are sticking to instagram rather than facebook because facebook is where their parents are. Has nothing to do with privacy. If you want to make something "uncool" to young people, get the parents involved.

Makes you realize how disconnected the media is from reality (but anyone who's lived though the 2016 US elections could tell you that).

or how overblown those concerns often are, since they are in fact being spouted by the business model that facebook effectively killed: media ads.

i dont think that is the case. people care about their privacy, and facebook provides adequate controls to make them feel safe. they have not had leaks of private messages for example, which would be very embarassing. and compared to the wide web at large, they are have pretty good security. HN users live in a bubble where money grows in VC trees and nobody needs advertising.

Like you say, no one cares. It’s not a problem that’s in your face that you’re always seeing. It’s an abstract thing that people chose to ignore or are entirely ignorant of — to FBs benefit.

I think those are the last breaths before a long and epic fall that is in the making.

Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase.

I'm sure FB improved its monetization and will continue to improve it as it grows as a company. But they also benefit from an overall increase on online ad spending - which is expected to grow 19% this year ).

https://techcrunch.com/2019/02/20/emarketer-digital-ad-forec...

Nearly 19% increase in online ad spending overall + FB's 8% growth + improved monetization and you can see why FB ad rev increased 30%. Online ad spending is expect increase by double digits for many years so FB, GOOG, etc are sitting pretty as long as they can hold onto and grow their userbase.

Even if FB did nothing, their ad revenue would most likely increase by double digits every year simply because the digital ad space is increasing by double digits every year. Money is pouring into digital space and they have one of the biggest buckets.

Most Facebook revenue comes from US and Europe where user growth is basically zero. The 8% user growth is driven by poorer countries like India and Indonesia, so the contribution of user growth to revenue would be much less - I'd say around 4%.

Also much of the increase in online ad spend comes because of the improved monetisation of online ads. If Facebook had just sat on their hands, I'd estimate that their revenue would have grown 4% due to user growth, 3% due to growth in average user income, and 5% due to increase in average screen time. That's a 12% tailwind.

Facebook's actual revenue grew 26% so it's reasonable to say that around 14% of that was due to Facebook improving their ability to match users with advertisers.

(Disclaimer: I own FB shares)

> Growing ad revenue 30% YoY with users rising 8% YoY means FB is really improving on monetizing its userbase

Generally for a service like FB, just by becoming more valuable and useful to its users revenue can increase non-linearly with increases in users.

* Daily active users (DAUs) – DAUs were 1.56 billion on average for March 2019, an increase of 8% year-over-year.

* Monthly active users (MAUs) – MAUs were 2.38 billion as of March 31, 2019, an increase of 8% year-over-year.

* Headcount – Headcount was 37,773 as of March 31, 2019, an increase of 36% year-over-year.

The headcount is mostly hiring manual moderators.

Moderation is probably done by contractors or vendors, not employees.

People keep harping on about 'delete Facebook': it doesn't matter because they have laid cookies everywhere and have already built a profile. Newly born people will at least have some connection through their other properties that will help lay their Pixel tracker all over the web properties.

Doesn't it not work if you use uBlock? I thought it blocks FB pixel so they have no idea about your web doings.

Reply on news.ycombinator.com