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The Zacks Analyst Blog Highlights: Facebook, Amazon, Pinterest and Fox

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For Immediate Release

Chicago, IL – January 29, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Facebook FB, Amazon AMZN, Pinterest (PINS - Free Report) and Fox Corp. FOXA.

Here are highlights from Tuesday’s Analyst Blog:

Will Asia & Watch User Growth Aid Facebook (FB) Q4 Earnings?

Facebook is set to report fourth-quarter 2019 results on Jan 29.

The company’s growing popularity in international markets, particularly Asia, is expected to have expanded the user base in the to-be-reported quarter.

The Zacks Consensus Estimate for Monthly Active User (MAU) in Asia stands at 1.040 billion, indicating 9.8% growth from the year-ago quarter’s reported figure. Notably, Asia-Pacific MAU increased 10.5% year over year in the third quarter.

Moreover, Daily Active User (DAU) in Asia is estimated to increase 10.9% from the year-ago quarter’s reported figure to 640 million. Notably, Asia-Pacific DAU grew 11.8% year over year in the last reported quarter.

Click here to know how the company’s overall fourth-quarter performance is likely to be.

Security Initiatives Boost User Confidence

Facebook’s user base of more than 2.7 billion (including its Family of services — Instagram, WhatsApp and Messenger) presents a larger canvas for advertisers and makes the platform highly attractive.

Further, the company has chalked out initiatives to improve privacy, transparency and authenticity of ads and remove fake accounts from the platform over the trailing 12 months. The company has recruited 30,000 people and also made huge investments in AI systems to eliminate harmful content.

Further, the rollout of the “Off-Facebook Activity” tool that enables users to better control their privacy, partnerships with independent fact-checking organizations and the “turn off location tracking” tool for Android users are some key initiatives, which are expected to have helped improve user confidence.

Notably, during the quarter, Facebook settled a case with advertisers related to ad-metric and agreed to pay $40 million. Moreover, the company has been focusing on making the Messenger platform more popular for businesses.

Facebook Messenger’s vast user base of more than 1.3 billion is expected to have attracted ad revenues in the to-be-reported quarter. Featured advertisements allow businesses to boost revenues and provide customer service through Messenger. Reportedly, 20 billion messages are exchanged between people and businesses every month.

However, Facebook’s efforts to make its platforms more secure have hurt ad-targeting capabilities of advertisers, which is likely to reflect on the top line in the to-be-reported quarter.

Notably, the company faces significant competition from Google, Twitter and Amazon for ad dollars. Moreover, Pinterest’s growing popularity is concerning for Facebook. Per a recent report by eMarketer, the company surpassed Snapchat as the third-largest social media service in the United States, following Facebook and Instagram.

The Zacks Consensus Estimate for Facebook’s fourth-quarter advertising revenues is currently pegged at $20.57 billion, indicating growth of 23.6% from the year-ago quarter’s reported figure. However, the estimated growth rate compares unfavorably with the preceding quarter’s 28.4% (32% at constant currency).

Increased Sports Content in Facebook Watch

Additionally, Facebook’s investment in sports video content via partnerships with NFL and ESPN provides it a competitive edge against the likes of Twitter and Amazon.

Moreover, Facebook’s rights to stream La Liga matches in India and Premier League soccer matches in Cambodia, Laos, Thailand and Vietnam between 2019 and 2022 are expected to have expanded the Facebook Watch user base, which reportedly has more than 720 million monthly and 140 million daily users.

Further, during the quarter, the company inked a partnership with Fox Corp. division Fox Sports to bring more sports-related content to Facebook Watch.

Facebook Watch’s expanding user base, backed by the company’s efforts to boost engagement, is likely to have driven the top line in the fourth quarter.

Zacks Rank

Facebook currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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