Source: oberver.com/Chip Somodevilla/Getty Images

• Facebook reported Mar-18 results with revenue 4% and earnings 25% ahead of the Street.
• Most notably, DAUs of 1.45B (up 13% y/y) were in-line with the Street despite relentless negative press, suggesting the Facebook brand is bulletproof.
• The company indicated some advertisers paused spending a month ago, but have largely returned.
• The only red flag was new user controls in Europe, due to GDPR, which could have a slight negative impact on engagement. This begs the question: will the upcoming global user control rollout hurt global engagement?
• Facebook is a gold standard in terms of delivering results, but we continue to question the company’s long-term value to society.

What should we infer from European GDPR commentary? In order to comply with the EU’s new General Data Protection Regulation (GDPR), Facebook is rolling out new tools that allow users to control how much information Facebook and advertisers are able to access. On the earnings call, Facebook management commented that these controls could result in European MAUs and DAUs being flat or down. They also said that they would be extending the GDPR-compliant controls to other geographies beyond Europe. When asked why these controls would result in lower engagement in Europe, but not the other markets, COO Sheryl Sandberg responded that the controls will be “localized” and that’s where the difference will come from. Despite these comments, we expect moderating DAU growth over the next year.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.