Facebook delivers impressive results as net income almost doubles in one year. Investors send the shares to a new all-time high as analysts boost the price target.
Facebook reported its first-quarter 2021 results and shares jumped over 7% in response. The company beat expectations by a mile and offered strong forward guidance. Consequently, the share price reached a new all-time high as the financial details impressed investors.
Both revenues and earnings-per-share (EPS) surprised to the upside, by $2.46 billion and $0.96 respectively. What really impressed investors was the year-on-year growth, especially on the bottom line (i.e., net income).
Net income almost doubled in the course of a year; a performance that most companies would be hard pressed to emulate.
Details of Facebook’s Strong Financial Performance
Besides the impressive rise in net income, Facebook’s cash position deserves some attention. The company sits on cash, cash equivalents, and marketable securities in excess of $64 billion— a staggering level by all counts. Daily active users on the platform increased by 8% year-over-year, which is unsurprisingly when we consider the fact that the pandemic led people to spend more time online.
Advertising revenue grew by 30% year-over-year, driven by an increase in the average price per advert. However, the number of delivered adverts also grew by 12%, and the company expects the revenue growth from advertising to continue into the second quarter of the year.
Speaking of the second quarter, Facebook offered strong forward guidance, saying that growth should remain stable and even accelerate modestly in the months ahead. Investors liked what they heard and the company’s shares went through the roof to a new all-time high.
Analysts also liked the results, with some of them calling Facebook a “must own” stock for advertising. The forward guidance played a key role in analysts upgrading their targets; for example, Truist Securities boosted the price target from $350 to $400.
In summary, this was an impressive quarter for Facebook, with strong financial details, a huge cash position, and ongoing growth.