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Facebook (FB) Mixed on Troubled Quarter, PETS Misses

Another healthy start to a new trading week as Q3 earnings season gears up to full-throttle this week and next. Roughly a quarter of the way through reporting on the S&P 500 when this week began, by the end of next week we’ll have a clear sense of Q3’s overall performance. The Dow hit a fresh all-time closing high: +673 points (+0.19%) to 35,744. The S&P did even better, +0.48% on the day. The Nasdaq doubled that performance to +0.90% and the Russell 200 took the day: +0.93%.

Facebook FB released mixed results in its Q3 report after the bell today: earnings beat by 2 cents in the quarter to $3.22 per share, and up nearly +20% from year-ago earnings, on revenues of $29.01 billion which missed the Zacks consensus $29.55 billion. It’s still better than 30% growth year over year, but missing sales numbers is never ideal for a growth company.

Daily Active Users (DAU) were right in-line with estimates at 1.93 billion, while Monthly Active Users (MAU) actually missed by a tad: to 2.91 billion from 2.93 billion anticipated. The company itself blamed issues related to Apple iOS privacy changes, but what this narrative seems to articulate is that Facebook growing its core businesses — Facebook, Messenger, Instagram and What’s App — at a slower rate than previously.

For this reason, the company is setting up a new reporting system in future quarters: revenue numbers for its core businesses will now be kept separate from its new Facebook Reality Labs businesses. This new segment is likely where much investment is going to take place with the idea that this is where the company’s future growth will stem. Facebook is also under attack from former internal sources regarding policy choices made at the company in recent years. It would be difficult to cite a social media firm going through the wringer as painfully as Facebook is at this moment.

It’s not keeping late traders from picking up Facebook shares in late trading, however. The graph looks like a parabolic shift back toward early-September highs, as the stock is trading nearly +4% in the after-market. Shares already had been +22% year to date — no sell-the-news here, even with Facebook having lowered its revenue guidance for next quarter to $31-34 billion. The Zacks consensus had been for $34.78 billion in sales next quarter earlier.

Petmed Express PETS, on the other hand, is -4.4% in late trading, giving up its daily gains and then some on its fiscal Q2 report which missed on both top and bottom lines: earnings of 31 cents per share missed the Zacks consensus by 3 cents (and well off the year-ago pace of 42 cents per share — PETS was a pandemic winner, relatively, a year ago), and sales of $67.4 million was well below the $70.9 million expected. Shares of PETS had already been down nearly -15% year to date.

Tomorrow brings us quarterly results from Alphabet GOOGL, Advance Micro Devices AMD and Twitter TWTR. And new home sales data will come in from two sources: the Case-Shiller Home Price Index and seasonally adjusted, annualized New Home Sales. So far, the market likes what it sees. But it’s probably overall economic conditions bringing most of the positivity — much more than lackluster reports from Facebook and Petmed today.

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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
 
PetMed Express, Inc. (PETS): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Twitter, Inc. (TWTR): Free Stock Analysis Report
 
Alphabet Inc. (GOOGL): Free Stock Analysis Report
 
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