The company reported EPS for 0.85 cents per share, which is significantly less (-48.8% negative surprise) than the forecasts of 1.66 and yet the data from the report did not hamper the stock's performance.
The massive gap in the EPS initial estimations and the consequently reported actual data stems from the possibility for a one-time 5 billion charge, which Facebook Inc. might be forced to pay because of an ongoing Federal Trade Commission inquiry.
The FTC launched the investigation into Facebook’s operations after the public outrage following the controversy between the company and Cambridge Analytica, and the leaked personal data. However, the Washington Post reported the investigation in January, and it also made public the possibility of this one-time charge.
Hence, the market had enough time to take into account and price in the potential consequences for the company’s shares even if it is forced to pay the 5 billion in charges. That is why the market sentiment remained virtually unchanged after Wednesday’s earnings report, and there was no market shock because of the considerable disparity between the initial estimations and the actual data.
The share price rose with more than 10 dollars on Wednesday after the market’s close on the better-than-expected revenue of $ 15.08 billion vs the initially forecasted $ 14.98 billion.
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