Facebook (FB: $127, down $2, but trading at $118 in overnight trading) reported that 3Q16 net income rose to $2.4 billion from $900 million a year earlier. Earnings came in at $1.09 per share up from 57 cents a year earlier. The $1.09 handily beat the 97 cents that analysts expected. The company said that mobile was responsible for much of this growth. Revenue hit $7.0 billion in the third quarter, up 56% from $4.5 billion a year earlier, topping expectations for $6.9 billion.
All and all, a fabulous quarter. The results mark the sixth straight quarter that Facebook has surpassed analyst expectations for both earnings and revenue.
But the company said things will slow down next year, because they just can’t continue at this pace due to the law of large numbers. The Chief Financial Officer said advertising growth will “come down meaningfully.” And we believe this is why the stock sold off last night.
Listen to this:
In the past year, Facebook added 270 million new mobile users who log in at least once a month. (That's 740,000 a day, seven days a week.) Of its 1.8 billion monthly users across all platforms, 93% are on mobile. Wow. Mobile advertising made up 84% of Facebook’s advertising revenue in the third quarter, an acceleration from the previous year.
This is a company that we want to own. With the stock down in overnight trading, it is giving us all an opportunity to buy more, as the stock is on sale.