The issue with Facebook is an expectations correction: Evercore ISI’s Mahaney

CNBC Television published this video item, entitled “The issue with Facebook is an expectations correction: Evercore ISI’s Mahaney” – below is their description.

Evercore ISI’s Mark Mahaney joins Closing Bell to discuss Facebook’s newly-released earnings. The company surpassed analysts’ estimates for earnings and revenue, but the stock was down after hours. “I’m pretty certain that you’re going to get premium growth rate out of Facebook for the next three to five years,” Mahaney says. Subscribe to CNBC PRO for access to investor and analyst insights on Facebook and more: https://cnb.cx/3dIH56N

Facebook shares fell as much as 5% in extended trading on Wednesday after the social-media company called for revenue growth to slow in the quarters ahead, even as second-quarter results came in ahead of estimates.

Here’s how the company did:

Earnings: $3.61 per share, adjusted, vs. $3.03 per share as expected by analysts, according to Refinitiv.

Revenue: $29.08 billion, vs. $27.89 billion as expected by analysts, according to Refinitiv.

Daily active users (DAUs): 1.91 billion, vs. 1.91 billion as expected by analysts, according to StreetAccount.

Monthly active users (MAUs): 2.90 billion, vs. 2.91 billion as expected by analysts, according to StreetAccount.

Average revenue per user (ARPU): $10.12, vs. $9.66 as expected by analysts, according to StreetAccount.

Facebook’s revenue grew by 56% year over year in the second quarter, according to a statement. It’s the fastest growth since 2016, accelerating from 48% growth in the prior quarter. The company pointed to a 47% increase in average price per ad, along with a 6% increase in the number of ads it delivered.

Revenue from Facebook’s Other segment, including consumer hardware such as Oculus virtual-reality headsets, totaled $497 million, up 36% and less than the $685.5 million StreetAccount consensus.

With respect to guidance for the second half of the year, Facebook said it expects “year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.” That’s effectively unchanged from Facebook’s guidance three months earlier. Analysts polled by Refinitiv had expected $28.22 billion in revenue for the third quarter, which implies 31% growth.

Facebook said in the second quarter it had 3.51 billion monthly users across its family of apps, up from 3.45 billion in the first quarter. This metric is used to measure Facebook’s total user base across its main app, Instagram, Messenger and WhatsApp.

In the U.S. and Canada, where Facebook generates more average revenue per user than in other regions, the company reported 195 million daily active users, the same as in the first quarter. In Europe the count declined sequentially to 307 million from 309 million in the first quarter.

Analysts and shareholders will be looking to see just how much Apple’s iOS 14.5 update impacted Facebook’s advertising business. The update allows iPhone and iPad users to limit companies from tracking their device’s activity. This makes it difficult for companies like Facebook to target users with personalized ads.

Already, Snap and Twitter have navigated the challenges of Apple’s iOS 14.5 update, which gives people more control over apps that want to track them, without much trouble. Both companies did warn that the long-term impacts of iOS 14.5 remain to be seen, but so far, the early returns have been promising.

Facebook also had some run-ins with Washington during the quarter. A federal court dismissed an antitrust complaint from the Federal Trade Commission against the company, along with a separate case brought by 48 state attorneys general. The FTC has until Aug. 19 to change its complaint, and the group of states said Wednesday it will fight the court’s decision.

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