Facebook Stock Crushes Expectations, Market Yawns?

When you buy Facebook stock, not only do you get the world’s leading social media company by a long shot – you get a portfolio of apps, too. (GETTY IMAGES)

Facebook Inc (ticker: FB) reported second-quarter earnings after the bell on Wednesday, and results blew Wall Street’s already high expectations out of the water. Despite the company beating estimates on both the top- and bottom-line, FB stock immediately dropped more than 3 percent in after-hours trading before rebounding to trade roughly unchanged.

The ho-hum price action is a change of pace for Facebook shareholders, who had watched shares gain more than 40 percent year-to-date until the Q2 report.

Facebook earnings by the numbers. Earnings per share came in at $1.32, up 69 percent from the same quarter a year ago, while revenue rose 45 percent to $9.32 billion.

Analysts expected Facebook to report earnings per share of $1.13 on revenue of $9.2 billion – so frankly both numbers were pretty impressive.

Monthly active users (MAUs) rose 17 percent to 2.01 billion, topping the 2 billion user number for the first time ever.

When FB stock went public in 2012, the social media giant's woes with monetizing mobile quickly came to the forefront and drove the stock down to $18 a share. Today, those fears look foolish. Mobile advertising revenue accounted for 87 percent of total revenue, up from 84 percent a year ago.

Average revenue per user (ARPU) advanced to $4.73, representing year-over-year growth of 24 percent.

Facebook and Alphabet (GOOG, GOOGL) increasingly dominate the online advertising industry. In recent years, both companies have literally accounted for 100 percent of spending increases in digital advertising.

Pros and cons of FB stock. When you buy Facebook stock, not only do you get the world’s leading social media company by a long shot – you get a portfolio of apps, too.

"While there’s still more monetization available through advertising on Facebook’s core social media app, the opportunities with Instagram, Messenger, and WhatsApp are plentiful," says Aaron Goldman, CMO of 4C Insights, a company that helps clients measure, plan, buy and sell content and advertising.