MarketWatch First Take: Facebook follows Google in recognizing earnings reality

Facebook Inc. surprised investors Wednesday by suddenly embracing earnings that don’t ignore stock-based compensation, the same move Alphabet Inc. made this quarter, but not following Google’s lead in one important aspect of the change may have hurt Facebook’s stock.

Facebook FB, -1.72%reported better than expected earnings results based on generally accepted accounting principles, or GAAP, which it will now use to report its profit. But unlike Alphabet GOOGL, -0.11%GOOG, -0.24% Facebook gave investors no warning ahead of time that the change would be coming, which led to confusion among investors (and algorithms) that were expecting Facebook to report higher, non-GAAP numbers.

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