Wednesday, April 27, 2016

Facebook & PayPal Earnings, and Fed Policy Statement

Today we received earnings from FB, PYPL, and received a Federal Reserve Policy Statement. I'll start with earnings reports.

Facebook announced a 189% increase in EPS of $0.52(GAAP), and revenues came in at $5.3 billion(57% increase). Revenues, earnings, and the number of advertisers all saw strong growth. The user metrics also came in strong.  The company also proposed a new capital structure that will allow Zuckerberg to retain control of the company while still allowing him to give to charity as most his net worth is tied up in the company stock. Here is what CEO Mark Zuckerberg had to say.

"We had a great start to the year," said Mark Zuckerberg, Facebook founder and CEO. "We're focused on our 10 year roadmap to give everyone in the world the power to share anything they want with anyone."
If you didn't hear the first warning shot at the 10 year road map announcement it definitely came through loud and clear in that statement. All competitors should be on alert because Facebook is going to eat your cake if it can.

Now to PayPal. 

PayPal reported Q1 earnings growth of 43% to $0.30(GAAP) per share on revenue that grew 19% to $2.5 billion.  The company reported strong growth across the board and is gaining market share. Additionally their new initiatives are turning out well. Guidance was re-affirmed for the year at $1.09-$1.14(GAAP). I expect that guidance number to be beaten, and I'll guess the full year will see $1.20-$1.24. Here is what the CEO Dan Schulman had to say.

"Our first quarter results continue to demonstrate the power of our global payments platform to attract and engage consumers, increasing our global scale and in turn attracting new merchants and partners to PayPal,” said Dan Schulman, President and CEO of PayPal. “Our focus on payments and ability to innovate for merchants and consumers continues to differentiate PayPal and drive our growth in a dynamic and competitive environment.”

Not to beat a dead horse but these two companies are killing it right now. I'm very impressed with the results for both and I expect more of the same this year.

Now on to the Fed policy statement. It was really a non event. They did omit the previous statement regarding their concerns for global financial developments. Apparently the rest of the world isn't a concern anymore. Amazing how one day you matter, and the next you don't. Either way expectations have been tamed and I think one more hike sometime this year should be expected. 

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