Facebook earnings ()
It seems only Wall Street’s high expectations can derail Facebook (FB). Shares of the social media giant are once again in all-time high territory as it sets to report fourth quarter fiscal 2017 earnings results after the closing bell Wednesday.
All eyes will be on the company’s online and mobile advertising revenues, where Facebook, along with Alphabet (GOOG, GOOGL) subsidiary Google, dominate the industry. How the company performs in assets such as Instagram, which is approaching 1 billion users, while becoming a strong cash producer for Facebook, will also be an important factor in the reports. The extent to which Facebook was able to monetize WhatsApp and Messenger will also determine how strong its revenue and earnings growth will be.
For the three months that ended December, the Menlo Park, Calif.-based company is expected to earn $1.95 per share on revenue of $12.54 billion, translating to year-over-year growth of 38% and 42%, respectively. For the full year, earnings are projected to rise 39% year over year to $5.90 per share, while full-year revenue of $40.27 billion would rise 45.7% year over year.
But the top- and bottom-line numbers are just part of the story. On Wednesday, Wall Street will have its eyes on the company’s growing user base — an area where Facebook, with its sizable user base of more than 2 billion, continues to dominate over the likes of Snap (SNAP) and Twitter (TWTR). With such a mammoth base already formed, finding new users is going to be a challenge, particularly in where there is seemingly full penetration in regions like North America and Europe.
On Wednesday analysts will focus on the company’s growth metrics in areas like India and Asia to get a sense of how much growth cushion Facebook has to help offset the tapering off that’s occurring in developed markets. Elsewhere, there will be a focus on the company’s new products and the many initiatives Facebook has undertaken that are aimed at boosting user engagement. These include testing out a subscription model in its Instant Articles, which helps publishers grow subscribers.
In an effort to attract more advertisers, Facebook also partnered restaurants, hoping it can get its users to order food through the platform. Analysts will ask about the progress of these new tools and requests metrics for how effective they can be tracked. More importantly, how much will these or other initiatives contribute to the company’s 2018 guidance? The progress of the company’s recent investments in security and other safety measures will also be a hot topic.
Meanwhile, although Facebook shares are back towards recent highs, the stock — up about 5% in three months — has done very little since the Q3 result s were released. As such, I like the risk-versus-reward profile of the stock. And given the company’s track record of breathtaking numbers, these shares could easily break above $200 once the results are released, making FB stock a solid bet ahead of Wednesday’s results.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
