Facebook Posts Stellar Quarterly Earnings for Q3 2022 - Shares Tumble Due To Profit Taking And Expectation of Growth Slowdown

This is non investment advice. The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.

Facebook (NASDAQ:FB) has posted their quarterly earnings report for Q3 2022 and managed to shell annotator estimates once again. Surprisingly, even though the visitor showed stellar growth its shares have started slipping downwardly. This is driven primarily by profit taking measures past investors who expect Facebook's growth streak to come to a halt by 2022.

Facebook (NASDAQ:FB)'s 3rd Quarter 2022 Quarterly Issue Highlights

Earlier we get into the nitty gritty of things, here are the fiscal numbers:

The company generated a net income of $ii.379 Billion (GAAP ground) on a acquirement of $7.011 Billion. Facebook's revenue is upwardly 56% twelvemonth over year and profitability is up 166% year over year.
Advert accounted for $6.816 Billion in revenues and payments and other fees accounted for $195.
Operating margin has increased to 45% from 32% a year ago.
Costs and Expenses are upwardly past 28% at $iii.122 Billion, up from $3.042 Billion a yr ago.
Diluted EPS is 82 cents per share, up 165% from 31 cents per share a year agone.
The effective tax rate remains a solid 25%

Since we are talking about a company that is a social network offset and foremost, here are the operational highlights for this quarter:

Daily active users (DAUs) were 1.18 billion on average for September 2022, an increase of 17% year-over-year.
Mobile DAUs were 1.09 billion on average for September 2022, an increase of 22% year-over-year.
Monthly agile users (MAUs) were i.79 billion as of September 30, 2022, an increment of 16% twelvemonth-over-year.
Mobile MAUs were 1.66 billion as of September 30, 2022, an increase of 20% year-over-year.
Capital letter expenditures for the 3rd quarter of 2022 were $1.10 billion.
Cash and cash equivalents and marketable securities were $26.14 billion at the end of the third quarter of 2022.

Interpreting the numbers

One of the very basic factors that decide the cost movements of the stock of any company is the expectation of growth. While our honey Facebook (NASDAQ:FB) has managed to beat out analyst's expectations once over again, investors have started to go very wary of an impending slowdown in growth and this has started to price itself in. To be clear, at this point in time, the slump in the shares is being driven by nothing more than profit taking past investors.

Its all theoretical, and has no ground in a change in fundamentals. The trouble is being further compounded by the fact that an executive (David Wehner, CFO) has stated that he expects the growth to taper off sometimes in 2022 while the visitor continues to postal service strong quarters. Whether this really happens or not, take chances disfavor dictates that the probability is immediately priced in and the market corrects.

Facebook (NASDAQ:FB) shares take slumped most a full ten% to $120 (at the time of writing) from the loftier of $133 but a few days back. In theory, the growth stage of any company has to cease eventually but with Facebook, its heavy diversification too as the power to stay alee of disruptive trends gives it the advantage. One of the shining beacons that could conductor in a brand new era of growth for Facebook is the virtual reality department (Oculus Rift) which has nevertheless to striking it off (the reasons for which are exterior the scope of this article but have primarily to do with loftier production cost, high platform cost and lack of killer apps).

The visitor's mobile ventures, like e'er, are quick to adopt and digest whatever potential disruptive trend. Whatsapp was caused, Snapchat functionality was integrated in and recently Prisma'southward AI filters are in the pipeline equally well. Where other companies usually go for a wait-and-meet approach, Facebook gets ahead of the trend outset, and asks questions later.

A very recent example of this is the Prisma App, which disrupted other filter apps by using an AI based filter portfolio. It was miles ahead of whatever traditional filter app and Facebook only one-upped it by introducing the aforementioned AI based filter style, for videos, which is something not fifty-fifty the original Prisma can do. The company (NASDAQ:FB) has a very good for you fright of existence rendered obsolete by a disruptive app - and this is probably one of its strongest characteristic.