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Facebook Earnings Arrive: Will It Top or Flop This Time?
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Facebook, Inc.’s third-quarter earnings report is due on Oct 30, after market close. The release will round out tech earnings from the high-profile FANG stocks, with the other members being Amazon.com, Inc. (AMZN - Free Report) , Netflix, Inc. (NFLX - Free Report) and Google parent Alphabet Inc. (GOOGL - Free Report) .
Shares of Amazon, Netflix and Google have gone down after the quarterly release. Now, the question looming large is whether Facebook will be able to spring a surprise this earnings season. Investors expect the Instagram property, one of the best in the world, and the Facebook platform to prove profitable. The company’s WhatsApp acquisition has helped it to be part of the chat business while the Oculus purchase has lent it an edge in the Virtual Reality platform.
That said, Facebook’s stock has been a huge disappointment of late. It has undoubtedly been a tough stretch for Facebook since it forecasted slowing growth and rising expenses in the second quarter. During the period, the stock spiraled down from an all-time high of $218.62 to the present $142.09. The stock has now fallen below its 50-day and 200-day moving averages in intense trading. As a matter of fact, the social media giant has underperformed the broader market on a year-to-date basis (-17.6% vs -0.4%).
What’s Working Against Facebook?
Advertising has been by far Facebook’s largest business. For instance, the company reported ad revenues of $13 billion in the second quarter out of $13.2 billion in total revenues. And in recent quarters, the company has taken steps to expand ad offerings across its platforms.
Still, its ad market, especially mobile ad market, is stagnated at 26.5%, per eMarketer. Meanwhile, Google’s share has increased to 33.7%, while Amazon is gaining steam with market share growing from 0.2% in 2016 to 0.9% this year. In fact, some ad buyers have expressed concerns about Facebook’s overall ad sales.
Ad-related concerns affected Facebook’s share price. Bank of America Merrill Lynch analyst Justin Post, in the meantime, lowered his price target on Facebook from $205 to $190 last week.
Privacy and security concerns are also doing no good to the company. On Sep 28, Facebook provided details on a new security issue that affected nearly 50 million accounts. Such security concerns will for certain hamper user growth as many would delete their user account and many may choose not to sign up. Advertisers, in turn, may decide to spend less on that platform or not spend at all.
A wave of high-profile executives leaving Facebook also raised eyebrows. Instagram co-founders Kevin Systrom and Mike Krieger, as well as Oculus co-founder Brendan Iribe have quit Facebook recently. Investors are, no doubt, asking for clarity related to such exits.
Challenging Times May Affect Facebook Earnings
From waning advertising sales to executive departures and data breaches, all may affect Facebook's earnings results. The Zacks Rank #3 (Hold) company is widely expected to report $1.46 of earnings per share in the third quarter, less than $1.59 a year ago. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Facebook has an Earnings ESP of -2.89%, which dims the possibilities of a positive surprise. At the same time, the Zacks Consensus Estimate for earnings has trended down over the past 60 days, as estimates moved down from $7.08/share to $7.06/share right now.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Facebook Earnings Arrive: Will It Top or Flop This Time?
Facebook, Inc.’s third-quarter earnings report is due on Oct 30, after market close. The release will round out tech earnings from the high-profile FANG stocks, with the other members being Amazon.com, Inc. (AMZN - Free Report) , Netflix, Inc. (NFLX - Free Report) and Google parent Alphabet Inc. (GOOGL - Free Report) .
Shares of Amazon, Netflix and Google have gone down after the quarterly release. Now, the question looming large is whether Facebook will be able to spring a surprise this earnings season. Investors expect the Instagram property, one of the best in the world, and the Facebook platform to prove profitable. The company’s WhatsApp acquisition has helped it to be part of the chat business while the Oculus purchase has lent it an edge in the Virtual Reality platform.
That said, Facebook’s stock has been a huge disappointment of late. It has undoubtedly been a tough stretch for Facebook since it forecasted slowing growth and rising expenses in the second quarter. During the period, the stock spiraled down from an all-time high of $218.62 to the present $142.09. The stock has now fallen below its 50-day and 200-day moving averages in intense trading. As a matter of fact, the social media giant has underperformed the broader market on a year-to-date basis (-17.6% vs -0.4%).
What’s Working Against Facebook?
Advertising has been by far Facebook’s largest business. For instance, the company reported ad revenues of $13 billion in the second quarter out of $13.2 billion in total revenues. And in recent quarters, the company has taken steps to expand ad offerings across its platforms.
Still, its ad market, especially mobile ad market, is stagnated at 26.5%, per eMarketer. Meanwhile, Google’s share has increased to 33.7%, while Amazon is gaining steam with market share growing from 0.2% in 2016 to 0.9% this year. In fact, some ad buyers have expressed concerns about Facebook’s overall ad sales.
Ad-related concerns affected Facebook’s share price. Bank of America Merrill Lynch analyst Justin Post, in the meantime, lowered his price target on Facebook from $205 to $190 last week.
Privacy and security concerns are also doing no good to the company. On Sep 28, Facebook provided details on a new security issue that affected nearly 50 million accounts. Such security concerns will for certain hamper user growth as many would delete their user account and many may choose not to sign up. Advertisers, in turn, may decide to spend less on that platform or not spend at all.
A wave of high-profile executives leaving Facebook also raised eyebrows. Instagram co-founders Kevin Systrom and Mike Krieger, as well as Oculus co-founder Brendan Iribe have quit Facebook recently. Investors are, no doubt, asking for clarity related to such exits.
Challenging Times May Affect Facebook Earnings
From waning advertising sales to executive departures and data breaches, all may affect Facebook's earnings results. The Zacks Rank #3 (Hold) company is widely expected to report $1.46 of earnings per share in the third quarter, less than $1.59 a year ago. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Facebook has an Earnings ESP of -2.89%, which dims the possibilities of a positive surprise. At the same time, the Zacks Consensus Estimate for earnings has trended down over the past 60 days, as estimates moved down from $7.08/share to $7.06/share right now.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>