Facebook Inc Earnings Model (Suri)
Author: Pranshu Suri, Published: July 27, 2020 7:28pm, Category: Earnings Preview (Prior to the 2Q2019 earnings release)
Summary of Model: Despite the great uncertainty in the macroeconomic environment in which Facebook sits, the company has weathered the events of the past few months with over $60B in cash, cash equivalents, and marketable securities on its balance sheet at the end of quarter 1. Facebook’s capital structure is not highly levered at all, unlike other companies who have fallen victim to the unyielding economic conditions of many countries during the COVID-19 pandemic. This is not to say that Facebook will persist unscathed with everything going on in the world. In the second and coming quarters, this model forecasts that Facebook’s margins will go down, expenses will go up, monthly active users will go up, and average revenue per user will go down (all of which will subsequently stabilize into 2021) due to many factors. These factors and others are discussed in further detail in the attached Earnings Report (pdf)
Disclosure of Potential Conflicts of Interest: The author of this article/model has no financial investment or other conflict of interest related to the subject company or other companies discussed. Any views made or implied in the content represent the author’s opinions.