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How Facebook “Beat” 2016 Earnings On A $1 Billion Tax Benefit From Accounting Change


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Yesterday evening we noted that Facebook’s stock soared in after-hours trading after the company announced inline revenue results for 4Q 2016 but blew away street EPS estimates of $1.34 with an actual EPS of $1.44. But, like with most tech company earnings, a slightly deeper dive into the results reveals that a conveniently timed accounting change created $214 million of extra net income in 4Q and drove about 73% of the earnings “beat” for the quarter.

On an annual basis, the earnings farce is even more drastic. For the full year of 2016, the tax accounting changes added $934 million in net income to Facebook’s P&L, or roughly $0.32 per share. – READ MORE

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