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Facebook’s Guidance Disappoints; Shares Not Yet Cheap

We’re still confident in the firm’s long-term prospects, but we recommend waiting for a wider margin of safety before investing.

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Facebook reported slightly mixed second-quarter results with revenue in line with our internal forecast but below consensus. It did beat expectations on the bottom line. 

But Facebook’s guidance on margins trending to the mid-30s during the next couple of years as the company will be investing further in innovation, content creation, and data protection, was disappointing.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.