Expectations reset amidst near-term headwinds
Q2 revenue missed and growth was guided to slow more than anticipated in H2 due to FX, privacy related issues and growth in Stories. With op margin also guided to decline to ~35% over the next few years (vs 44% in '18) our FY19/FY20 EPS ests comes down ~12-13%. Overall it does appear Facebook is facing some monetisation pressures as engagement shifts from FB to IG and from Feed to Stories, but g iven the 20% after-hours decline, expectations having been reset and still material monetisation opportunities across the platform we remain O'weight, albeit lowering our YE18 PT to $200.Facebook is building and engaging products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices. The company's products include: Facebook, which enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers; Instagram, which is a place where people can express themselves through photos, videos, and private messaging, and explore their interests in businesses, creators and communities; Messenger and WhatsApp, which are messaging applications; and Oculus, which connects people through its Oculus virtual reality products.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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