Facebook: That Was Easy
- Q4 GAAP EPS of $2.38 beats by $0.20.
- Revenue of $16.91B (+30.4% Y/Y) beats by $510M
This move generally supports my theory that Facebook will start focusing more on AI to improve the health of the social platform. Now lets see where the company guides on expenses for 2019. My prediction was somewhere around 45% growth, though the forecast may start the year off at 50% growth.
Update - 5pm
Facebook made the following guidance for Q1 and 2019:
- Q1 revenues - growth rate to decelerate by a mid-single digit %
- 2019 expenses to grow by ~40-50%
- 2019 capital expenditures at $18-$20 billion
- 2019 tax rate a few % points above 2018 rate of 13%.
- The expense growth is already at my forecast of a reduction to 45% growth for the year My forecast now is that expenses will only come in at 40% for 2019.
- The effective tax rate is at the predicted 15% level.
My base case of 20% revenue growth and 40% expense growth along with a 15% tax rate got the company to an EPS estimate of nearly $7. Faster growth and lower expenses combined with lots of share buybacks quickly pushes the estimates above $7.50.
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