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Will Facebook's (FB) Community Focus Boost its Q4 Earnings?

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Facebook’s attempts to protect the community indicate its new mission, which is to “give people the power to build community and bring the world closer together."

Given this, CEO Mark Zuckerberg, on the last earnings call, stated that the company was willing to forego profits in order to step up security on its platform.

Facebook’s sizable investment to strengthen security on its platform is likely to drive user engagement in the soon-to-be reported quarter.

Focus on User Engagement

Facebook is striving hard to improve user engagement. Facebook’s user base continues to grow at a significant pace driven by new features and tools.
 

Ever since the Russian ad fiasco came into the spotlight, Facebook has been increasing safety measures on the platform, which helped its quarterly performance to remain unaffected.

For the fourth quarter, the Zacks Consensus Estimate for monthly average users (MAUs) is 2.13 billion, while daily average users (DAUs) are expected to be 1.41 billion. The figures indicate an improvement of 14.7% and 15.2%, respectively from the year-ago quarter numbers.

Click here to know how the company’s overall Q4 performance is expected to be.

Security Push

In October, Facebook established a set of rules for advertisers to make ads more transparent. The company said bringing more transparency is good for democracy and elections. It is a must for political advertisers to verify their identities now.

Facebook also announced a tool that will help people to learn if they were influenced by fake ads sponsored by Russia-based Internet Research Agency in the period from January 2015 to August 2017.

Facebook expanded its fund raising tools globally and eliminated transaction fees on offerings made to non-profitable organizations via its platform. The company also expanded its artificial intelligence (AI) efforts to identify users with suicidal motives by recognizing patterns in their posts and live videos.

All these factors are expected to drive user dependence and reliability on Facebook, improve user engagement and attract more advertisers to the platforms, thereby giving a significant boost to its top line.

Zacks Rank and Other Stocks to Consider

Facebook carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader technology sector include Micron Technology Inc. (MU - Free Report) , Lam Research Corporation (LRCX - Free Report) and The Trade Desk Inc. (TTD - Free Report) , all sporting a Zacks Rank #1.

Long-term earnings growth rate for Micron, Lam Research and The Trade Desk is projected to be 10%, 14.85% and 25%, respectively.

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