What happened
Shares of Facebook (META -0.09%) gained 56.6% in 2019, according to data from S&P Global Market Intelligence . The social media company bounced back from a relatively challenging year in 2018 and nearly doubled the rise of the S&P 500 index thanks to strong earnings performance and reduced concerns about big fines and regulatory crackdowns.
Facebook stock dipped roughly 25.7% in 2018, largely because of the fallout of a string of data-privacy scandals and the threat that the company would be subject to increased regulation from government bodies. 2019 was relatively scandal free by contrast, and the company published earnings reports that showed encouraging momentum for user engagement, sales, and net profits amid spending to drive growth. Combined with momentum for the broader market, these factors powered the tech stock to big gains last year.
Image source: Getty Images.
So what
The following table breaks down sales and earnings growth across the four quarterly reports that the company published last calendar year:
| Quarter | Revenue | Revenue Growth YoY | Earnings Per Share | Earnings Per Share Growth (Decline) YoY |
|---|---|---|---|---|
| Q4 2018 | $16.91 billion | 30% | $2.38 | 65% |
| Q1 2019 | $15.08 billion | 26% | $0.85 | (50%) |
| Q2 2019 | $16.89 billion | 28% | $0.91 | (48%) |
| Q3 2019 | $17.65 billion | 29% | $2.12 | 20% |
Data source: Facebook; YoY = Year over year.
Earnings performance beat the market's targets in Q4 2018 and Q3 2019 but missed the average analyst targets for the second and third quarters in the 2019 fiscal year.
Facebook leads the social-media market and enjoys a massive global user base across platforms including its namesake social network, Instagram, and WhatsApp, but it still needs to invest heavily to maintain its forefront position -- and expenses will sometimes come in significantly ahead of analyst targets. The company ended the third quarter with a monthly active user base of $2.45 billion, up 8% year over year.
Now what
Facebook stock has continued to climb in 2019's trading, with shares up roughly 6% on the year so far.
The company is scheduled to report fourth-quarter results for its 2019 fiscal year after the market closes on Jan. 29, and management is guiding for the business's year-over-year sales growth to decelerate as a result of ad-targeting headwinds and a particularly strong Q4 2018.
For the 2020 fiscal year, the company plans to boost its headcount and increase its spending on marketing and other growth initiatives. These moves have management guiding for total expenses to be between $54 billion and $59 billion, with the midpoint of that target representing a roughly 20% increase compared to the $47 billion midpoint target for 2019.
Facebook stock trades at roughly 23.8 times the average analyst earnings target for the 2020 fiscal year.
