2018 was difficult Facebook (NASDAQ: FB). Although the action of the social network reached its all-time high of $ 218.62 last summer, it closed the year by 26% less than when investors worried about slowing growth of the company and the increase in operating costs between efforts to improve security and privacy on its platform.
But this year the sentiment towards Facebook has improved significantly, with an increase of up to 36% per year. This strong rebound obviously exerts enormous pressure on the company's first quarter update. Investors will look to Facebook to show that its strong growth story is still intact.
Here is an overview of some specific areas to look at when the results of Facebook reports later this month.
Although Facebook's revenue growth has slowed recently, growing 30% yoy in the fourth quarter compared to 49% growth in the first quarter of 2019, the pace of deceleration was moderate in the fourth quarter. In the second and third quarters of last year, for example, Facebook's annual revenue growth rates were 42% and 33% respectively. These growth rates represented a significant slowdown compared to 49% growth year on year in the first quarter. The growth in turnover in the fourth quarter of the previous year of 30%, therefore, may have been slower, but highlighted the ability to recover the strong growth of the company.
To this end, Facebook's fourth-quarter revenue of $ 16.9 billion was placed at the top end of management's guidance and beat analysts' expectations. The management had driven the fourth quarter revenue up from 24% to 30%.
For the first quarter of Facebook, the management said that the expected revenues will increase from 24% to 26% year on year. Given the growing market optimism for the stock recently, investors should look for revenue growth for the period near the high end of this range.
Facebook's operating expenses rose sharply in 2018, increasing 51% year-over-year. Expenditures increased particularly rapidly towards the end of the year, increasing by 62% in the fourth quarter to $ 9.1 billion.
"In addition to continued investment in infrastructure, security and innovation, expenses have also been driven by seasonal factors, including marketing efforts," explained David Wehner, CFO, in the fourth quarter survey.
It is expected that further investments in infrastructure, security and safety investments will lead to a more marked growth in expenses in 2019, with a guide that will bring expenses up from 40% to 50% compared to 2018. Investors should therefore try to increase operating expenses at a rate within this range.
Finally, investors should check the growth of Facebook users, in particular the size of the company of monthly users active on its entire family of social networks, including Facebook, Instagram, Messenger and WhatsApp. Facebook said that 2.7 billion people have used at least one of its apps in December, with over 2 billion active every day. About 2.5 billion and 2.6 billion users have interacted with at least one of these apps in the second and third quarters respectively. Can this metric hit 2.8 billion in the first quarter?
Facebook is expected to publish the results of the first quarter on Wednesday, April 24th, after the market closes.