Facebook shares are trading a little lower pre-market on Thursday. The company’s stock price saw a strong rally over 2020 but has had a more difficult and volatile start to 2021. Despite the rally over recent weeks, we have seen some selling in recent days despite a better than expected set of Q4 earnings.
Earnings & Revenues Jump
Facebook reported fourth-quarter earnings per share of $1.68 versus estimates of a $1.42 EPS. Revenues were also higher than expected at $28.07 billion versus the $26.44 billion Wall Street was looking for.
Looking at the breakdown of the Facebook factsheet, there are further positive signs for investors to get excited about. Facebook’s daily active users increased to 1.84 billion over the quarter, beating the 1.83 billion expected. Monthly active users also shot up to 2.8 billion, versus 2.76 billion expected.
Meanwhile, the average revenue per user was higher than expected at $10.14 billion, versus $9.49 billion. Revenue per user has grown steadily from $4.23 in Q1 2017 to more than double at the current level. This suggests a healthy engagement from Facebook’s user base.
Facebook To Limit Political Content
However, there are some more concerning parts of the results that investors have no doubt picked up on. For example, in the US and Canada, Facebook’s active daily user numbers have fallen to 195 million from 196 million.
This could reflect the controversy surrounding Facebook over the content featured on its platform. There were a lot of complaints around sensitive, offensive content during the BLM movement and the US elections.
During the earnings call, Facebook CEO Mark Zuckerberg said:
“One of the top pieces of feedback that we’re hearing from our community right now is that people don’t want politics and fighting to take over their experience on our services.”
In response to that, Facebook has said that it will be working to reduce the amount of political content that is displayed in users’ feeds.
Facebook Correction Continues
Facebook shares continue to trade within the broad 244.19 – 304.30 range which has developed following the correction from the 304.30 level in Q3 last year.
Price was recently capped at the 278.88 level and the channel top. For now, Facebook is broadly trading within a corrective bearish channel to the longer-term bull trend.
While price holds above the 244.19 level, the preferred view is still for a break higher above the 278.88 level and a continuation higher, targeting a breakout above the 304.30 level.
