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Facebook (FB) Stock Wavers Despite Impressive Q2 Earnings Beat

By U.S. News & World Report

Facebook Inc (ticker: FB) reported second-quarter earnings after the bell on Wednesday, and results blew Wall Street’s already high expectations out of the water. Despite the company beating estimates on both the top- and bottom-line, FB stock immediately dropped more than 3 percent in after-hours trading before rebounding to trade roughly unchanged.

[See: 7 Best Tech Stocks to Buy for 2017.]

The ho-hum price action is a change of pace for Facebook shareholders, who had watched shares gain more than 40 percent year-to-date until the Q2 report.

Facebook earnings by the numbers. Earnings per share came in at $1.32, up 69 percent from the same quarter a year ago, while revenue rose 45 percent to $9.32 billion.

Analysts expected Facebook to report earnings per share of $1.13 on revenue of $9.2 billion — so frankly both numbers were pretty impressive.

Monthly active users (MAUs) rose 17 percent to 2.01 billion, topping the 2 billion user number for the first time ever.

When FB stock went public in 2012, the social media giant’s woes with monetizing mobile quickly came to the forefront and drove the stock down to $18 a share. Today, those fears look foolish. Mobile advertising revenue accounted for 87 percent of total revenue, up from 84 percent a year ago.

Average revenue per user (ARPU) advanced to $4.73, representing year-over-year growth of 24 percent.

Facebook and Alphabet ( GOOG, GOOGL) increasingly dominate the online advertising industry. In recent years, both companies have literally accounted for 100 percent of spending increases in digital advertising.

Pros and cons of FB stock. When you buy Facebook stock, not only do you get the world’s leading social media company by a long shot — you get a portfolio of apps, too.

“While there’s still more monetization available through advertising on Facebook’s core social media app, the opportunities with Instagram, Messenger, and WhatsApp are plentiful,” says Aaron Goldman, CMO of 4C Insights, a company that helps clients measure, plan, buy and sell content and advertising.

Instagram has more than 700 million monthly active users, and WhatsApp and Messenger both have more than 1.2 billion.

“Longer-term, it’s all about AI and VR, and the model will go well beyond mere advertising to fully integrated commerce and entertainment,” Goldman says, referring to artificial intelligence and virtual reality. “As for advertising, Facebook is only scratching the surface of the converging video market, which makes the hundreds of billions in global TV budgets addressable. Clearly, there’s lots of upside for Facebook in the future,” Goldman says.

[See: 7 of the Best Cheap Stocks to Buy Under $10 .]

Not everyone is as sanguine about Facebook’s avenues for growth.

“Facebook’s future growth relies on international markets and on mobile, both of which are known to have a lower cost per click or ARPU,” says K C Ma, professor of finance at Stetson University.

“Facebook has also warned that the ad load has reached a high level that cannot be sustained,” Ma says, pointing out that the company’s rapid 40-percent-plus rate of revenue growth isn’t long for this world.

Daily versus long-term price action. Many traders were expecting a great report on Wednesday and a subsequent short-term rally in FB stock. Short interest, or the percentage of shares that are sold short by traders betting prices will fall, dropped to a 12-month low just before the announcement.

Those traders got a great report — but not the corresponding big rally they were expecting.

That’s the danger in betting how much FB — or any stock — will move in the aftermath of an earnings report. It’s like flipping a coin.

Long-term investing is far less risky and much more advisable for retail investors. And, especially after the market’s muted reaction to a pretty stellar report, Facebook shares still look like a solid long-term bet.

[See: 9 of the Market’s Best Growth Stocks.]

After all, 2 billion pairs of eyeballs will attract any advertiser, and as other social media companies like Twitter ( TWTR) struggle to grow their considerably smaller user base by even mid-single digits, Facebook is growing by double digits despite its market saturation.

More from U.S. News

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7 Dividend Stocks to Buy That Pay More Each Year

Facebook (FB) Stock Wavers Despite Impressive Q2 Earnings Beat originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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