Jim Cramer: Social media quarterly reports about expectations

CNBC's Jim Cramer breaks down the earnings reports in the top four social media stocks.

Facebook shares sold off almost 10% in the two days after reporting a fourth-quarter beat at the end of January. As of Friday’s close, the stock is down about 6% since the earnings report.

The social media giant, which owns the Instagram photo app and WhatsApp messaging platform, reported earnings per share of $2.56 and revenue of $21 billion, topping Wall Street estimates of $2.53 per share and $20.9 billion of revenue, according to FactSet.

Though Cramer was pleased by the results, he said Wall Street wanted to see a wider marginal beat. After Facebook gave investors a series of strong quarterly reports in 2019, the stock was doomed by high expectations, he said. Shares had risen more than 8% from the beginning of the year going into the Jan. 29 report.

Cramer said the stock was “priced for perfection going into the quarter.”

“It didn’t help that Facebook’s revenue guidance for the next quarter was less than stellar [and] management plans to spend more money than Wall Street was expecting,” he said. “Anything less than perfection was going to spark a sell-off, and that’s exactly what happened. Long term, I remain a believer in Facebook.”

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