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Facebook Q1 16. Painful splits
A stick in the eye for corporate governance A great set of results was marred by the timely announcement of a share split that further strengthens the founders’ grip on the company to the detriment of all other owners. Q1 16 revenues/adj-EPS were $5.4bn/$0.77 compared to consensus at $5.3bn/$0.62. Although revenues beat by 2.5%, EPS beat by 23% mostly due to a lower tax rate but also due to expenses growing more slowly than revenues. The outlook for profit and cash flow has also improved as the company stated it should be able to keep expenses within the current plan despite revenues faring better than expected. With 1.65bn monthly active users (MaU’s) and 1bn daily users on mobile devices, Facebook still has all the makings of the biggest ecosystem of them all. The good news is that the company has recognised this and is moving full steam ahead to make the most of the opportunity that it has.
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