Shares of Facebook closed more than 2% lower on Monday, just two days before the company is set to report its fiscal fourth-quarter financial results. Facebook has remained a must-own stock within the internet industry for years, but as investors gear up for its latest report, the company finds itself at what could be a major turning point.
Indeed, the social media king is currently embroiled in several of its fiercest public relations scandals on record—including one that threatens to slow the red-hot stock down in 2018. As of late, Facebook has been forced to answer questions related to the use of its website to spread disinformation during the 2016 presidential campaign cycle. Mark Zuckerberg’s polarizing company is also dealing with increased public scrutiny over data security.
Facebook has already received criticism—from both lawmakers and the general public—for its failure to properly vet content on its website. Now, the company is slated to increase spending on security and double down on its initiatives to prevent abuse, pledging in its previous earnings announcement to invest “so much in security that it will impact our profitability.”
But up to this point, Facebook has overcome whatever challenges it has faced by continuing to innovate and expand. So what should investors expect from the company this quarter? Well, our current consensus estimates are calling for Facebook to post adjusted earnings of $1.96 per share and revenues of $12.563 billion, which would represent year-over-year growth of 39.0% and 42.6%, respectively.
Key Report Items
But of course, total earnings and revenue are just two of the many things investors will be looking at when Facebook reports on Wednesday. In fact, it is entirely possible that the company’s post-earnings momentum is based on its performance in what investors have determined to be its key report items, especially if the stock hopes to shake off concerns about security spending.
To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.
One of the most compelling figures in any Facebook report is the company’s monthly active users (MAUs) total. According to our latest consensus estimates, Facebook is expected to report that it finished the quarter with 2.134 billion MAUs. That would represent growth of about 14.7% year-over-year and 3.0% sequentially.
Another thing that investors will likely hone in on is Facebook’s average revenue per user (ARPU) figure. This gives investors a better idea of how well Facebook is capitalizing on each individual user, and steady growth in this category will become even more important as user growth eventually plateaus.
Our consensus estimate file is currently calling for Facebook to report ARPU of $5.89 in the quarter. This result would mark growth of 21.9% year-over-year and 16.2% sequentially, possibly indicating that the company’s new focus on video has paid off.
Finally, we should also highlight growth in Facebook’s Asia-Pacific region, which has been one of its key expansion catalysts recently. Based on our most recent consensus estimates, we expect that Facebook will report Asia-Pacific revenues of $2.040 billion for the quarter, which would represent growth of 51.2% from the year-ago period. Last quarter, Facebook reported growth 52.5% in this region.
Want more analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
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3 Key Estimates for Facebook's Q4 Earnings Report
Shares of Facebook closed more than 2% lower on Monday, just two days before the company is set to report its fiscal fourth-quarter financial results. Facebook has remained a must-own stock within the internet industry for years, but as investors gear up for its latest report, the company finds itself at what could be a major turning point.
Indeed, the social media king is currently embroiled in several of its fiercest public relations scandals on record—including one that threatens to slow the red-hot stock down in 2018. As of late, Facebook has been forced to answer questions related to the use of its website to spread disinformation during the 2016 presidential campaign cycle. Mark Zuckerberg’s polarizing company is also dealing with increased public scrutiny over data security.
Facebook has already received criticism—from both lawmakers and the general public—for its failure to properly vet content on its website. Now, the company is slated to increase spending on security and double down on its initiatives to prevent abuse, pledging in its previous earnings announcement to invest “so much in security that it will impact our profitability.”
But up to this point, Facebook has overcome whatever challenges it has faced by continuing to innovate and expand. So what should investors expect from the company this quarter? Well, our current consensus estimates are calling for Facebook to post adjusted earnings of $1.96 per share and revenues of $12.563 billion, which would represent year-over-year growth of 39.0% and 42.6%, respectively.
Key Report Items
But of course, total earnings and revenue are just two of the many things investors will be looking at when Facebook reports on Wednesday. In fact, it is entirely possible that the company’s post-earnings momentum is based on its performance in what investors have determined to be its key report items, especially if the stock hopes to shake off concerns about security spending.
To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.
One of the most compelling figures in any Facebook report is the company’s monthly active users (MAUs) total. According to our latest consensus estimates, Facebook is expected to report that it finished the quarter with 2.134 billion MAUs. That would represent growth of about 14.7% year-over-year and 3.0% sequentially.
Another thing that investors will likely hone in on is Facebook’s average revenue per user (ARPU) figure. This gives investors a better idea of how well Facebook is capitalizing on each individual user, and steady growth in this category will become even more important as user growth eventually plateaus.
Our consensus estimate file is currently calling for Facebook to report ARPU of $5.89 in the quarter. This result would mark growth of 21.9% year-over-year and 16.2% sequentially, possibly indicating that the company’s new focus on video has paid off.
Finally, we should also highlight growth in Facebook’s Asia-Pacific region, which has been one of its key expansion catalysts recently. Based on our most recent consensus estimates, we expect that Facebook will report Asia-Pacific revenues of $2.040 billion for the quarter, which would represent growth of 51.2% from the year-ago period. Last quarter, Facebook reported growth 52.5% in this region.
Want more analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>