Facebook (FB) is set to report Q1 results tonight after the close with a conference call to follow at 5pm ET. FB usually reports immediately after the closing bell.
Current Capital IQ consensus stands at EPS of $1.12 on Revenues of $7.82 bln.
While the stock is not cheap at a 22x Forward P/E it is certainly not outrageously priced given its growth. Forward P/E is actually ~30% cheaper than its historical valuation since IPOing in 2012.
- Revenue Growth- Revenue growth was 54% y/y in Q4. FB reiterated that it expected revenue growth to 'come down meaningfully' in 2017 due to tougher comps.
- Expenses- Non-GAAP Expense in 2017 is expected to increase 47-57%. FB has stated that 2017 will be an investment year and that it is accelerating its hiring process. FB expects to increase spending in R&D, content, sales and marketing. We would note that FB lowered its expense growth towards the lower end of guidance in each quarter in 2016.
- CapEx- Current guidance is for $7.0-7.5 bln; 2016 was $4.5 bln.
- Facebook Messenger app has 1.2 bln users, up from 1 bln ~6 months ago. FB has four apps with more users than its social media peers: Facebook has 1.86 bln MAU; Messenger 1.2 bln; WhatsApp 1.2 bln; Instagram 600 mln. Twitter (TWTR) MAU 319 mln; Snapchat (SNAP) 161 mln.
We rode this one pretty nicely from last week and currently hold the May 155/157.5C. I am going to sell them and and roll into SEP 170C. (free position)