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Facebook (FB) to Report Q3 Earnings: What's in the Cards?
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Facebook is set to report third-quarter 2019 results on Oct 30.
The company expects a sequential decline in revenue growth rates (on a constant-currency basis) for third as well as fourth-quarter 2019.
The Zacks Consensus Estimate for revenues is pegged at $17.32 billion, indicating an increase of almost 26.2% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for third-quarter earnings is pegged at $1.90, which declined a penny in the past 30 days.
Notably, the company’s earnings have missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 17.7%.
In the last reported quarter, Monthly Active Users (MAUs) were 2.414 billion, up 8.1% year over year. Daily Active Users (DAUs) were 1.587 billion on average, increasing 7.9% year over year and representing 66% of MAUs.
Let’s see how things are shaping up for the upcoming announcement.
Factors to Consider
Facebook’s third-quarter top line is expected to reflect the growing popularity of Stories. Notably, Instagram and WhatsApp are the top two popular Stories products in the world. Instagram has more than 500 million DAUs on Stories.
The company’s new products like automated ads for small businesses, dynamic ads on Instagram Stories and branded content ads on Instagram are expected to have helped advertisers reach their targeted audience.
Moreover, Facebook’s initiatives to improve privacy, transparency and authenticity of ads and remove fake accounts from the platform are expected to have boosted user trust and engagement. These initiatives are likely to have contributed to Facebook’s advertising revenues in the to-be-reported quarter.
However, it is noteworthy that Alphabet’s (GOOGL - Free Report) Google, YouTube and Twitter are constantly trying to dominate the digital ad space. Amazon (AMZN - Free Report) is also aggressively focusing on improving its ad business. Facebook’s top line is expected to reflect the negative impact of intensifying competition as well as ad targeting-related headwinds in the third quarter.
Moreover, Facebook Watch’s expanded user base, backed by the company’s efforts to boost engagement, is likely to have driven the top line in the third quarter. The platform has now more than 720 million monthly and 140 million daily users, who spend at least one minute on Watch. On average, daily visitors now spend more than 26 minutes on Watch every day, which reflects improved engagement levels.
Additionally, Facebook’s investment in sports video content is expected to provide it a competitive edge against the likes of Twitter and Amazon.
However, in the third quarter of 2019, Facebook was involved in a number of controversies. Notably, the company is being investigated by the International Trade Commission (ITC) for violation of antitrust principles.
Furthermore, Facebook continued to receive significant backlash related to its blockchain-based cryptocurrency initiative, Libra.
Moreover, the bottom line is expected to reflect the negative impact of higher spending related to Facebook’s initiatives to secure its platform in the third quarter.
Key Q3 Developments
During the quarter, Facebook agreed to buy CTRL-Labs, a 4-year-old company developing software and a bracelet, which would let people control computers with their brains.
Additionally, on Sep 23, Disney division ESPN announced a partnership agreement with Facebook to bring exclusive digital shows and content to Facebook Watch.
Further, on Sep 20, Facebook announced that it has suspended tens of thousands of apps associated with about 400 developers for a variety of reasons, through the App Developer Investigation.
Also, on Sep 18, the company announced the launch of three new Portal models — Portal, Portal Mini and Portal TV. While Portal and Portal Mini will begin shipping on Oct 15, Portal TV shipping will start from Nov 5. Portal Mini, Portal and Portal TV cost $129, $179 and $149, respectively.
On Sep 5, Facebook launched Facebook Dating in the United States. Instagram users can integrate their Instagram posts directly into their Facebook Dating profile. They can also add Instagram followers to their Secret Crush lists, in addition to Facebook friends.
Moreover, Facebook announced steps to ensure more transparency and authenticity of ads about social issues, elections or politics during the quarter. Aimed at the U.S. presidential election in 2020, the company has sped up the authorization process for U.S.-based advertisers, disclosing more information about each advertiser publicly. It is also updating its list of social issues in the United States to better reflect the public discourse on and off Facebook.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Facebook (FB) to Report Q3 Earnings: What's in the Cards?
Facebook is set to report third-quarter 2019 results on Oct 30.
The company expects a sequential decline in revenue growth rates (on a constant-currency basis) for third as well as fourth-quarter 2019.
The Zacks Consensus Estimate for revenues is pegged at $17.32 billion, indicating an increase of almost 26.2% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for third-quarter earnings is pegged at $1.90, which declined a penny in the past 30 days.
Notably, the company’s earnings have missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 17.7%.
In the last reported quarter, Monthly Active Users (MAUs) were 2.414 billion, up 8.1% year over year. Daily Active Users (DAUs) were 1.587 billion on average, increasing 7.9% year over year and representing 66% of MAUs.
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.
Factors to Consider
Facebook’s third-quarter top line is expected to reflect the growing popularity of Stories. Notably, Instagram and WhatsApp are the top two popular Stories products in the world. Instagram has more than 500 million DAUs on Stories.
The company’s new products like automated ads for small businesses, dynamic ads on Instagram Stories and branded content ads on Instagram are expected to have helped advertisers reach their targeted audience.
Moreover, Facebook’s initiatives to improve privacy, transparency and authenticity of ads and remove fake accounts from the platform are expected to have boosted user trust and engagement. These initiatives are likely to have contributed to Facebook’s advertising revenues in the to-be-reported quarter.
However, it is noteworthy that Alphabet’s (GOOGL - Free Report) Google, YouTube and Twitter are constantly trying to dominate the digital ad space. Amazon (AMZN - Free Report) is also aggressively focusing on improving its ad business. Facebook’s top line is expected to reflect the negative impact of intensifying competition as well as ad targeting-related headwinds in the third quarter.
Moreover, Facebook Watch’s expanded user base, backed by the company’s efforts to boost engagement, is likely to have driven the top line in the third quarter. The platform has now more than 720 million monthly and 140 million daily users, who spend at least one minute on Watch. On average, daily visitors now spend more than 26 minutes on Watch every day, which reflects improved engagement levels.
Additionally, Facebook’s investment in sports video content is expected to provide it a competitive edge against the likes of Twitter and Amazon.
However, in the third quarter of 2019, Facebook was involved in a number of controversies. Notably, the company is being investigated by the International Trade Commission (ITC) for violation of antitrust principles.
Furthermore, Facebook continued to receive significant backlash related to its blockchain-based cryptocurrency initiative, Libra.
Moreover, the bottom line is expected to reflect the negative impact of higher spending related to Facebook’s initiatives to secure its platform in the third quarter.
Key Q3 Developments
During the quarter, Facebook agreed to buy CTRL-Labs, a 4-year-old company developing software and a bracelet, which would let people control computers with their brains.
Additionally, on Sep 23, Disney division ESPN announced a partnership agreement with Facebook to bring exclusive digital shows and content to Facebook Watch.
Further, on Sep 20, Facebook announced that it has suspended tens of thousands of apps associated with about 400 developers for a variety of reasons, through the App Developer Investigation.
Also, on Sep 18, the company announced the launch of three new Portal models — Portal, Portal Mini and Portal TV. While Portal and Portal Mini will begin shipping on Oct 15, Portal TV shipping will start from Nov 5. Portal Mini, Portal and Portal TV cost $129, $179 and $149, respectively.
On Sep 5, Facebook launched Facebook Dating in the United States. Instagram users can integrate their Instagram posts directly into their Facebook Dating profile. They can also add Instagram followers to their Secret Crush lists, in addition to Facebook friends.
Moreover, Facebook announced steps to ensure more transparency and authenticity of ads about social issues, elections or politics during the quarter. Aimed at the U.S. presidential election in 2020, the company has sped up the authorization process for U.S.-based advertisers, disclosing more information about each advertiser publicly. It is also updating its list of social issues in the United States to better reflect the public discourse on and off Facebook.
Zacks Rank
Facebook currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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