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Facebook, Inc. (NASDAQ:FB) beat on top and bottom lines, but the stock fell more than 7%

Facebook, Inc. (NASDAQ:FB) beat on top and bottom lines, but the stock fell more than 7%

Facebook beat on top and bottom lines, but the stock fell more than 7% on Wednesday after the company reported rising costs and expenses and a narrowing operating margin.

Here are the key numbers:

  • Earnings (EPS): $2.56 vs. $2.53 per share forecast by Refinitiv.
  • Revenue: $21.08 billionvs. $20.89 billionforecast by Refinitiv.
  • Daily active users (DAUs): 1.66 billion vs. 1.65 billion forecast by FactSet.
  • Monthly active users (DAUs): 2.5 billion vs. 2.5 billion forecast by FactSet.
  • Average revenue per user (ARPU): $8.52vs. $8.38 forecast by FactSet.

Facebook’s full-year 2019 costs and expenses came in at $46.71 billion, up 51% compared to its total in 2018. That coincides with a drop in the company’s operating margin, which fell from 45% in 2018 to 34% in 2019.

Facebook reported revenue growth of nearly 24.7% compared to a year prior, making it the fourth straight quarter that the company delivered sub-30% growth. Facebook COO Sheryl Sandberg announced that the company now has more than 8 million advertisers, up from 7 million in October 2019.

The company on Wednesday also announced a $10 billion share repurchase program.

“We had a good quarter and a strong end to the year as our community and business continue to grow,” Facebook CEO Mark Zuckerberg said in a statement. “We remain focused on building services that help people stay connected to those they care about.”

Facebook said it counts more than 2.89 billion monthly users across its family of apps, compared to 2.8 billion in the previous quarter. This metric is used to measure Facebook’s total user base across its main app, Instagram, Messenger and WhatsApp.

In the U.S. and Canada, Facebook’s user base rose to 190 million from 189 million a quarter earlier. Its user base in Europe increased to 294 million from 288 million daily active users in the prior quarter.

During a call with analysts, Zuckerberg said Facebook is preparing for an “intense year” that will include the 2020 U.S. election. Zuckerberg said it is his goal to better communicate the company’s policies on numerous issues.

“My goal for this next decade isn’t to be liked, but to be understood,” he said. “Because in order to be trusted, people need to know what you stand for.”

Facebook will make privacy a key focus of 2020 as a result of the company’s July 2019 $5 billion settlement agreement with the Federal Trade Commission, Zuckerberg said. The company, however, has yet to pay the penalty as the agreement is still pending court approval, Facebook Chief Financial Officer David Wehner said.

“It’s going to take time but over the next decade I want us to build a reputation on privacy that’s as strong as our reputation already building good, stable services,” Zuckerberg said.

Over the past year, Facebook has struggled with numerous regulatory challenges.

The company announced the libra digital currency in June, which has since struggled with pushback from lawmakers and regulators around the globe, losing key partners in the process.

In July, the company agreed to the $5 billion FTC fine as a result of the agency’s probe following the Cambridge Analytica scandal. The company is also facing four separate antitrust-focused investigations that were launched over the past year.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 206.31.

The projected upper bound is: 230.64.

The projected lower bound is: 217.02.

The projected closing price is: 223.83.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 57.1118. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 65.97. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 82. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed up 5.440 at 223.230. Volume was 142% above average (neutral) and Bollinger Bands were 19% wider than normal.

Open     High      Low     Close     Volume___
221.440 224.200 218.450 223.230 33,610,004
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 220.14 207.35 192.27
Volatility: 21 21 30
Volume: 14,638,162 13,504,187 14,977,955

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FACEBOOK INC A is currently 16.1% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into FB.O (mildly bullish). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 71 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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