Facebook shares slide on worrisome guidance for the back half of 2021

Facebook Inc (NASDAQ: FB) reported market-beating results for its fiscal second quarter on Wednesday on a sharp increase in digital advertising. Guidance for the second half, however, wasn’t received well, leading to the stock sliding about 4% in after-hours trading.

Mar Mahaney’s comments on CNBC’s “Closing Bell”

Commenting on Facebook’s earnings, Evercore ISI’s Mark Mahaney said “the issue with Facebook is an expectations correction” on CNBC’s “Closing Bell”:

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“Facebook put up upside to the street but not that high. I think there were expectations, including ours, that they could print as much as $30 billion. Nothing that’s changed for the fundamental long-term investor, but the near-term expectation was a bit higher.”

Financial performance

Facebook said its net earnings in the second quarter printed at $10.39 billion that translates to $3.61 per share. The social media giant generated $29.08 billion of sales that represent an annualised growth of 56%.

According to Refinitiv, experts had forecast the company to post $27.89 billion of revenue and $3.03 of EPS.

Other notable figures

Facebook noted a 7% year over year growth in monthly active users to 2.9 billion in the recent quarter that was roughly in line with what analysts had anticipated. In the U.S. and Canada, however, daily active users remained flat. The American multinational posted $10.12 of average revenue per user (ARPU) versus $9.66 expected.

Average price per ad, as per Facebook, jumped 47% in Q2. The Menlo Park-based company delivered 6% more ads in the recent quarter. Other notable figures include a 36% growth in revenue from FB’s “Other” segment that fell shy of estimates.

Guidance for the back half of 2021

“In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to Q2,” CFO David Wehner said in a statement.

The earnings report comes a month after Facebook joined the trillion-dollar club.