What to Expect When Facebook Reports Earnings

Chris Lange

Facebook Inc. (NASDAQ: FB) is scheduled to release its most recent quarterly results after the markets close on Wednesday. The consensus estimates from Thomson Reuters are $1.13 in earnings per share (EPS) and $9.2 billion in revenue. In the same period of last year, the social media giant posted EPS of $0.97 and $6.44 billion in revenue.

Ahead of the earnings report, Merrill Lynch issued a report in which it thinks there continues to be caution in the stock on ad load growth deceleration and higher video spending, while the street still has mixed views on the potential for monetization of Messenger. The brokerage firm has a Buy rating with a $170 price target. Potential second-half revenue/sentiment drivers include:

  • Pricing tailwinds driven by slower supply growth, new ad formats and video ramp
  • Strong traction for Instagram users, engagement and monetization
  • More evidence of upcoming Messaging monetization

Late in June, Facebook noted that the number of its users had reached 2 billion and as a result it is shifting gears in its mission statement and looking to combat extremism on its platforms as the largest social media app tries to take greater responsibility for its burgeoning influence in people’s daily lives.

Facebook’s milestone comes as the company has been under fire for how it has handled the dissemination of so-called fake news. It is also taking a more prominent role in combating terrorism. To take steps to address extremism on its platforms, Facebook and other technology companies have formed the Global Internet Forum to Counter Terrorism.

Prior to the release of the earnings report, a few analysts took the opportunity to weigh in on Facebook:

  • William Blair has an Outperform rating.
  • Macquarie has a Buy rating with a $175 price target.
  • Wells Fargo has an Outperform rating.
  • Deutsche Bank has a Buy rating with a $189 price target.
  • Goldman Sachs has a Buy rating and a $180 price target.
  • Needham reiterated a Buy rating with a $185 price target.
  • Aegis has a Buy rating with a $185 price target.
  • Pivotal Research has a Hold rating with a $140 price target.
  • BMO Capital Markets has a Hold rating and a $150 price target.
  • Barclays has an Overweight rating with a $168 price target.
  • Credit Suisse has an Outperform rating with a $180 price target.

So far in 2017, Facebook has outperformed the broad markets, with the stock up about 44%. However, over the past 52 weeks the stock is only up about 36%.

Shares of Facebook were last seen at $165.05, with a consensus analyst price target of $172.47 and a 52-week range of $113.55 to $166.17.