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Facebook (FB) to Report Q1 Earnings: What's in the Cards?

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Facebook is set to report first-quarter 2021 results on Apr 28.

For the quarter, Facebook expects year-over-year growth rate of total revenues to remain stable or modestly accelerate on a sequential basis in the first and second quarters of 2021.

Facebook expects changes made by Apple (AAPL - Free Report) in its iOS 14 platform to limit the former’s ability to track user-activity trend. The company also believes that Apple has become its biggest competitor.  

Notably, the Zacks Consensus Estimate for revenues is pegged at $23.67 billion, indicating an increase of 33.5% from the year-ago quarter’s reported figure.

Additionally, the consensus mark for first-quarter earnings is pegged at $2.35 per share, having been revised 0.4% downward in the past 30 days, indicating 37.4% growth from the figure reported in the year-ago quarter.

Notably, the company’s earnings missed the Zacks Consensus Estimate in one of the trailing four quarters while beating the same in the other three, the average surprise being 20.8%.

Facebook, Inc. Price and EPS Surprise

 

Facebook, Inc. Price and EPS Surprise

Facebook, Inc. price-eps-surprise | Facebook, Inc. Quote

Let’s see how things are shaping up for the upcoming announcement.

Digital Shift to Boost Y/Y Ad Sales

Facebook witnessed a jump in the usage of its services like Messenger, Instagram and WhatsApp amid coronavirus-induced lockdowns and shelter-in-home guidelines. The momentum is expected to have continued in the to-be-reported quarter.

The Zacks Consensus Estimate for first-quarter MAUs worldwide is pegged at 2.843 billion, suggesting 9.2% growth from the figure reported in the year-ago quarter. Moreover, DAUs worldwide is pegged at 1.879 billion, indicating 8.4% growth from the figure reported in the year-ago quarter.

Furthermore, an improved ad-spending environment, as well as accelerated digital shift, is expected to have driven Facebook’s ad revenues in the to-be-reported quarter. The company’s top line is likely to have gained from improving market share, driven by growing user base and continuing innovation in ad product.

Further, Facebook is expected to have benefited from coronavirus-induced accelerated shift in consumer demand for e-commerce services as a result of the platform adding a number of small-and-medium businesses (SMBs) in the to-be-reported quarter.

The company’s initiatives to build tools and functionalities for SMBs, which are helping them provide e-commerce services to users, is expected to have driven Facebook’s growth in the first quarter.

However, changes made by Apple and Alphabet’s (GOOGL - Free Report) Google in their mobile operating systems and browser platforms have limited Facebook’s ability to track user-activity trend. Moreover, intensifying competition from Google, Snap (SNAP - Free Report) and Twitter for ad-dollars remains a headwind.

These factors are expected to have affected year-over-year advertising revenue growth rate in first-quarter 2021.

Nonetheless, the company’s solid user base in the Asia Pacific region and growth in Instagram Stories and Feed are expected to reflect on the top line.

The consensus mark for this Zacks Rank #3 (Hold) company’s first-quarter advertising revenues is pegged at $23.20 billion, indicating 33% growth from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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