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$FB Earnings Review
$FB reported earnings yesterday and popped 15% as of this writing. I believe the jump was warranted on the increased user engagement. The market is confident that the macro issues will eventually subside, but were reassured about competition.
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Meta’s family DAP increased 6% YoY. Even more reassuring, their family DAP/MAP ratio remained constant at 79% suggesting stronger engagement. Also, Meta’s total impressions increased 15% YoY, suggesting people are spending more time on Meta.
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In terms of Facebook blue, UCAN DAUs ticked up and total DAU’s were up 4% YoY. More importantly, the DAU/MAU ratio ticked up to 67% suggesting stronger engagement as well.
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Zuck’s comments during the earnings call further point to increased engagement and the increasing popularity of reels.
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Revenue was up 10% after accounting for foreign exchange changes and the guide was light. Monetization was not as strong as many analysts hoped for, but this seems like a short-term headwind that the street is more than willing to look past.
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Zuckerberg seemed unconcerned about the monetization of Reels. He reminded investors that Facebook has a blueprint for it and they will be able to monetize as long as the engagement is high. If Zuckerberg is unconcerned, so am I.
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In terms of capital allocation, Meta bought back $9bn of stock, but I was slightly disappointed management did not hammer the buyback at lower prices. Even so, the buyback is still significant and they have almost $30bn remaining.
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Zuckerberg also appears to be listening to the street that they are not thrilled with the metaverse spend. He dropped the expenses estimates by $3bn. Even at the lower level, if Facebook loses the battle for the metaverse, it will not be because of a lack of capital deployed.
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Overall, I thought it was a great quarter. I will be releasing $FICO report later today and hopefully $VLY tomorrow.

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