Meta Platforms: Russia Closure Will Have a Minimal Effect Going Forward

Meta logo is shown on a device screen. Meta is the new corporate name of Facebook.

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Meta Platforms (NASDAQ:FB) told a Morgan Stanley (NYSE:MS) Technology conference on Mar. 10 that Russia accounts for just 1.5% of its global advertising revenue. As of Friday, Apr. 1, FB stock was at $224.85, up 8.3% from Feb. 24, the day of Russia’s invasion of Ukraine, and is up 20.4% from its trough price of $186.63 on Mar. 14. Incidentally, Mar. 14 is also the day that Russia cut off all access to Instagram and Facebook for its citizens. At the time, there were over 80 million Instagram users in Russia, over half of its population, according to the Financial Times.

The Financial Times reports that Instagram was the fifth largest market globally for its app and the 20th largest for Facebook. The 1.5% portion of its $114.9 billion in global advertising revenue works out to $1.72 billion that Meta will sacrifice going forward.

However, this loss of $1.72 billion in revenue will not greatly affect Meta’s earnings. It made $12.56 billion in free cash flow (FCF) in the fourth quarter alone, as well as $38.4 billion in all of 2021. As I pointed out in a recent InvestorPlace article, Meta made an FCF margin of 37.3%. So, the financial impact of $1.72 in lost Russian revenue will be just $642 million in terms of FCF. That is just 1.67% of its total FCF.

Investors are not worried about this aspect of Meta’s current troubles. As I explained in my prior article, other issues affecting the stock relate to users turning to non-Facebook sites. However, as I showed, fears about this have likely been overdone. As a result, FB stock has been rising lately and it is possible the stock could continue to rise.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com, Newsbreak.com and Beehiiv.com.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/fb-stock-not-likely-hurt-by-russia-as-revenue-was-only-1-5-percent-of-meta-platforms-total-ad-revenue/.

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