Please ensure Javascript is enabled for purposes of website accessibility

Facebook Management Talks Stories, Payments, and Guidance

By Daniel Sparks - May 8, 2019 at 10:21AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Don't miss these must-see quotes from the social network's latest earnings call.

Investors loved Facebook's (FB 1.83%) first-quarter results. Shares jumped about 7% following the quarterly update, which showed better-than-expected revenue and adjusted earnings per share.

But there's more to the quarter than a strong top- and bottom-line performance. Investors can find particularly interesting insights about the social network's business in its first-quarter earnings call. Three interesting topics discussed during the question-and-answer session with analysts include stories, payments, and management's outlook for revenue.

Facebook CEO Mark Zuckerberg discusses the company's 10-year roadmap at F8 2018

Facebook CEO Mark Zuckerberg. Image source: Facebook.

Stories: An "increasingly important growth opportunity"

Beyond better-than-expected top- and bottom-line results, the other key metric that may have played a key role in the stock's sharp rise after quarterly results were posted was Facebook's achievement of half a billion daily active users on each of its Stories experiences, including Facebook and Messenger, Instagram, and WhatsApp.

With so much user engagement, it's no surprise that the Stories format is a key growth opportunity for the company.

"Facebook and Instagram feed ads make up the bulk of our business today. We expect that to continue, but Stories are increasingly important growth opportunity," said Facebook Chief Operating Officer Sheryl Sandberg. "We are helping advertisers keep up with the shift in how people are sharing, just as we did with mobile."

She added that there are now 3 million advertisers using Stories ads.

The rise of commerce and payments on Facebook

Another area of opportunity for Facebook -- but one that will take more time -- is commerce and payments.

Facebook CEO Mark Zuckerberg explained:

[A]dvertising is going to be the way that the revenue comes in for the foreseeable future, but what we expect is as we build out more commerce-related features around shopping and Instagram and Marketplace and Facebook and certainly the private social platform that ... I've been talking about, I think will lend itself to private interactions around payments and commerce and interacting with businesses in that way.

But investors will need to exercise patience. In the near term, the company plans to offer these features at cost, or even for free, in order to prioritize the experience for small businesses.

Decelerating growth

In Facebook's first quarter, revenue increased 26% year over year -- a deceleration from 30% growth in the prior quarter and 33% growth in the third quarter of 2018. Looking ahead, Facebook CFO David Wehner said he expects this trend to persist.

"We continue to expect that our revenue growth rates will decelerate sequentially throughout 2019 on a constant currency basis," the CFO noted.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
FB
$195.13 (1.83%) $3.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.