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Strategies & Market Trends : Value Investing
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To: bruwin who wrote (61131)7/26/2018 11:22:18 PM
From: Spekulatius1 Recommendation

Recommended By
Jurgis Bekepuris

  Read Replies (2) of 78741
 
Re FB - I wasted some time watching the YouTube clip from Stexxman and I don’t think he explained the issue or is rather superficial. FB isn’t down 20% because they missed the numbers. FB stock was down <5% after they released the numbers, The stock really cratered during the CC and the main issue was that FB operating margin is projected to go to the mid 30% range from currently 44%. This is what cratered the stock. The reason for margin deterioration is that FB chooses to raise their expenses faster than revenues, which are projected to grow in the mid twenties (also slower than currently).

The spending increases is somewhat deliberate since FB decided to invest, partly in data centers (currently they have 6 , but building 8 more, and improve security and user experience, even if it costs them some revenue). None of this is great news from a financial POV in the short run, but it looks like they are really playing a LT game here.

The commentator also missed that Instagram (where teens tent to hang out) is owned by FB and growing like weed and actually beating arch rival Snapchat. Not worth watching and in my opinion, this individual is probably producing misleading or biased news.
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