When Facebook Inc. (NASDAQ: FB) reports third-quarter earnings on Wednesday it is expected to post earnings per share (EPS) of $0.19 on revenues of $1.91 billion. The EPS estimate is equal to the company’s actual earnings in the second quarter and the revenue estimate is about $100 million above last quarter’s total revenues.
Year-over-year growth for Facebook in the second quarter was more than $600 million, and the revenue estimate for the third quarter of this year is $650 million above the third quarter of 2012. With Facebook’s shares near their all-time high maybe there is still some profit-taking. And for investors who want to maintain exposure to social media companies, maybe Twitter Inc.’s initial public offering (IPO) will pay off better in the near term.
Facebook appears to be continuing on a growth track, so perhaps that is the reason that shares are trailing down from an all-time high near $55. Investors may not really be trying to evaluate the business case for the two companies, as much as they are the value of the shares in the two companies.
Twitter’s announced IPO range is $17 to $20 a share. Many analysts consider that a bargain price. The Wall Street Journal notes that some pre-IPO mutual fund investors had marked their investments as high as $24.37 a share as of the end of September. If Twitter goes out at the high end of its range, that’s still a discount of nearly 22% to the mark-to-market price.
No one expects Facebook shares to jump 22% — even if the company’s quarterly earnings report is a blockbuster — by November 6th, Twitter’s tentative IPO date. But will Twitter’s shares really go out within the announced range? Even if the shares go out above the range — perhaps especially if they do — investors are looking to make a nice profit on those unlucky enough not to get in on the IPO pricing. Tune in next week to find out.
Shares of Facebook are down about 2.7% in early afternoon trading Monday at $50.53 in a 52-week range of $18.87 to $54.83.