Facebook Earnings Call Creating Mass Investor Confusion

As it stated in Earnings blowouts from Caterpillar (CAT) and Amazon (AMZN) look like the norm this earnings season, not the Facebook (FB) earnings call meltdown. The month-to-date ratio of above versus below-consensus earnings guidance is tracking at 1.4, points out BofA, suggesting management is still guiding above analysts' (raised) estimates. On the positive side, the market is still rewarding earnings and sales beats despite valuations for many companies being high historically. Misses have been crushed, with shares dropping on average 3.6% the following session versus the 2.4% average. Here's what Jim Cramer is saying about Facebook after earnings to Action Alerts PLUS club members.

Facebook Shares Pounded on Revenue Miss, Guidance -- Earnings Live Blog Recap

Facebook Inc. (FB) investors gave a huge thumbs-down to the company's second-quarter earnings report and guidance. The social network beat earnings estimates but missed on revenues, the first time it's missed quarterly sales estimates since 2015. Facebook reported revenues of $13.23 billion vs. expectations of $13.34 billion, while GAAP EPS of $1.74 topped estimates of $1.71. Shares were initially down about 9% after hours following the report's release, but the losses accelerated as the company's earnings call proceeded. TheStreet's tech columnist, Eric Jhonsa, and Jeff Marks and Zev Fima, analysts with Jim Cramer's Action Alerts Plus portfolio, which owns Facebook, live blogged the company's earnings report and call with analysts.

Facebook Earnings Call Creating Mass Investor Confusion

as mentioned in That would imply around a 20% year-on-year growth rate exiting fourth quarter. And if so, what's driving this fairly dramatic deceleration in revenue growth? Clearly, the FB CFO's above statement does NOT say that FB revenue growth in Q4 will fall to 7-9%. How, I ask you dear reader, can we mathematically come up with a 20% Q4 2018 rate? 24% Q4 2018 exit rate is a full 20% higher than what Sandler quoted in his call.

collected by :Roy Mark