Facebook has been at the top of every stock-owners list for years now, but this tech-giant currently, finds itself at what could be a significant turning point. After receiving a lot of criticism over its incompetency to go through the content on its website, Facebook has vowed to install “so much insecurity that it will impact [its] profitability.”
The management of the organization has been trying to assure a better user experience to the users. Nonetheless, the company’s shift to a video-first focus should encourage it to deliver good results once again.
Latest Outlook
The current consensus estimates expect Facebook to report quarterly earnings of $1.96 per share plus revenues of $12.58 billion as of now. These results would depict the year-over-year growth rates of 39.0% and 42.8%, respectively.
Facebook’s post-earnings momentum possibly depends on its performance in what investors have learned to be its key report items, especially if the stock hopes to drop the concerns about security spending.
Based on the latest estimates, Facebook, quite expectedly, might report that its monthly active users (MAU) reached 2.134 billion in the quarter. Surely, a time will come when the platform’s MAU growth will stagnate, but this would denote growth of about 14.7% per annum and 3.0% sequentially. Hence clearly, this is a remarkable rate for such an established website.
In the meantime, investors might want to track how much is Facebook’s average revenue per user (ARPU). With the focus on video hopefully inspiring advertisers to pay more for visual content, the ARPU figure gives us a great picture of how Facebook is able to capitalize on its public.
If the estimates are to be believed, Facebook may report an ARPU of $5.89 for the quarter, thereby marking a growth of 21.9% yearly and 16.2% sequentially.
Earnings ESP Whispers
Investors will also want to assume the likelihood that Facebook startles investors with better-than-anticipated earnings results. Zacks Earnings ESP (Expected Surprise Prediction) shows earnings surprises by focusing on the most recent analyst estimates before the arrival of the earnings date fb. This is done because, when an analyst makes the prediction right before an earnings release, it suggests that they have fresh information, potentially more accurate one, than the predictions from a few months ago.
As we approach its report date, Facebook is donning a Zacks Rank #2 (Buy) and an Earnings ESP of 0.68% because the company’s most accurate estimate for earnings lies at $1.97 per share. In other words, the most recent analyst estimates came to be higher than the consensus.
Price Performance and Surprise History
Moreover, Mark Zuckerberg’s company’s has garnered a strong earnings surprise streak as per its history of earnings surprises.
As we can see, Facebook has successfully met or outdone earnings estimates in nine-consecutive quarters. Though, a positive earnings surprise has not always caused an immediate surge in the share prices.
Also, Facebook investors should expect the stock to flow as per anything that the company says about guidance or its spoken plans to spend more on security.
