Facebook stock (FB) drops as Q4 2020 earnings results show lower than expected DAU growth

As Facebook's Q4 2020 earnings results dropped, so did the stock on news of the company missing its Daily Active Users estimated target in late 2020.

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As we move into a new fiscal year and quarter, many major companies are sharing official earnings reports, highlights, and summaries of the previous quarter. Facebook was among those who shared Q4 2020 earnings results reporting today, and it looks like the company missed some targeted metrics, causing the stock to take a drop as a direct result. Here is the latest information from Facebook’s Q4 2020 earnings results.

Facebook (FB) Q4 2020 earnings results

Facebook stock (FB) took a substantial dip following the release of its Q4 2020 earnings result, but has recovered somewhat since.
Facebook stock (FB) took a substantial dip following the release of its Q4 2020 earnings result, but has recovered somewhat since. (Per Google)

Facebook posted its Q4 2020 earnings results on its investor relations website on January 27, 2021. Here’s what it had to say.

Highlights

  • Facebook daily active users (DAUs) – DAUs were 1.84 billion on average for December 2020, an increase of 11% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 2.80 billion as of December 31, 2020, an increase of 12% year-over-year.
  • Family daily active people (DAP) – DAP was 2.60 billion on average for December 2020, an increase of 15% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.30 billion as of December 31, 2020, an increase of 14% year-over-year.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $4.82 billion and $15.72 billion for the fourth quarter and full year of 2020, respectively.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $61.95 billion as of December 31, 2020.
  • Headcount – Headcount was 58,604 as of December 31, 2020, an increase of 30% year-over-year.

Summary

We continue to face significant uncertainty as we manage through a number of cross currents in 2021.

We believe our business has benefited from two broad economic trends playing out during the pandemic. The first is the ongoing shift towards online commerce. The second is the shift in consumer demand towards products and away from services. We believe these shifts provided a tailwind to our advertising business in the second half of 2020 given our strength in product verticals sold via online commerce and our lower exposure to service verticals like travel. Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth.

At the same time, in the first half of 2021, we will be lapping a period of growth that was negatively impacted by reduced advertising demand during the early stages of the pandemic. As a result, we expect year-over-year growth rates in total revenue to remain stable or modestly accelerate sequentially in the first and second quarters of 2021. In the second half of the year, we will lap periods of increasingly strong growth, which will significantly pressure year-over-year growth rates.

We also expect to face more significant ad targeting headwinds in 2021. This includes the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape. While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter.

There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments, and like other companies in our industry, we are closely monitoring the potential impact on our European operations as these developments progress.

We expect 2021 total expenses to be in the range of $68-73 billion, unchanged from our prior outlook. This is driven by investments in technical and product talent as well as continued growth in infrastructure costs.We continue to expect 2021 capital expenditures to be in the range of $21-23 billion, driven by data centers, servers, network infrastructure, and office facilities. Our outlook includes spend that was delayed from 2020 due to the impact of the pandemic on our construction efforts.

We continue to expect our full-year 2021 tax rate to be in the high-teens.


At the time of this writing, Facebook stock (FB) had dropped to a low of 255.60 per share from the day’s closing price of $271.74. The price has since bounced back a bit, but it will remain to be seen if it maintains on today’s news. As further companies continue to share financial results of the previous fiscal quarter, stay tuned to Shacknews and our full 2021 earnings release schedule for new updates and information.

News Editor

TJ Denzer is a player with a passion for games that has dominated a lifetime. When he's not handing out beatdowns in the latest fighting games, exploring video game history, or playing through RPGs with his partner, he's searching for new food and drinks in the constant pursuit of good times with good people inside and outside the South Texas area. You can also find him on Twitter @JohnnyChugs.

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