Skip to Content
Stock Analyst Update

Facebook Posts Strong Q4 Revenue

With the better-than-expected fourth quarter results, we have adjusted our top- and bottom-line projections a bit higher.


Facebook (FB) reported fourth quarter results ahead of our expectations and the S&P Capital IQ consensus. Strong user growth and interaction, which attracted more ad dollars, drove top-line growth in the quarter. The results did show a dip in operating margin compared with last year due to more investments in new products and innovation and higher legal costs. While Facebook’s network effect moat source is intact, the company does expect limitations on data utilization, which may impact top-line growth. For this reason, Facebook provided first-quarter revenue guidance below the consensus, but slightly above our projection. We continue to expect further deceleration in revenue growth due to a slowdown in user growth and monetization in the higher ad spending U.S. and Canada markets, and the negative impact of data restrictions on ad prices. With the better-than-expected fourth quarter results, we have adjusted our top- and bottom-line projections a bit higher, which after taking into account the time value of money, resulted in a 7.5% increase in our fair value estimate to $215. While this wide-moat name is down 7% in after-hours trading, we recommend waiting for additional pullback before investing.

Fourth-quarter ad revenue increased 25% from last year to $21.1 billion, as users continued to jump on the Facebook platform. The number of monthly active users (MAU) was up 8% year over year to nearly 2.5 billion while the daily active users (DAU) increased 9% to almost 1.7 billion. The latest features such as Stories on the Facebook app drove user growth during the quarter. Similar features on the Instagram app likely drove the 9.5% growth in family monthly active people (users that access any of the Facebook apps, including WhatsApp and Instagram, at least once a month) and 11% growth in family daily active people to 2.9 billion and 2.3 billion, respectively. The DAU/MAU ratio remained above 66%, continuing to indicate a high level of engagement on the platform.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.