Here is What To Count on From The Social Media Juggernaut

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Top line

Facebook, the world’s largest social media company, is expected to post a profit for the second quarter on Wednesday after its close, and like other big tech companies reporting this month, analysts are expecting record-breaking sales from a resurgent advertising market be worn.

Founded by billionaire Mark Zuckerberg, the world’s largest social media company is set to post … [+] Record second quarter revenue of nearly $ 28 billion.

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Important facts

On average, analysts expect Facebook in Menlo Park, California to report record second-quarter sales of $ 27.8 billion, up 49% over the same period last year, according to Bloomberg data.

Net income is projected to hit $ 3.02 per share, or roughly $ 8.5 billion, up 68% from $ 1.80 a year ago.

In a statement on Monday, Bank of America analysts said they expect Facebook to add about 36 million monthly active users in the last quarter, which would mean a record 2.9 billion users for the social network’s range of offerings – including Instagram and his Messenger service.

A number of analysts last week confirmed the optimistic valuations of Facebook shares in anticipation of a better-than-expected earnings report. Stephen Ju of Credit Suisse said that improving trends in advertising (where Facebook generates most of its revenue) bodes well for the bottom line of the company.

As of 12 noon ET, Facebook stock rose 1.2% to $ 373, bringing earnings on the stock to about 38% year-to-date – more than double the tech-heavy Nasdaq’s 16% gain.

What to look out for

Facebook’s earnings call for the second quarter will be on Wednesday at 5 p.m. EDT.

tangent

Last week, smaller social media rivals Snap and Twitter stunned Wall Street with profits that exceeded expectations, posting revenue growth of 116% and 74%, respectively. Both results suggest a stronger-than-expected rebound in online media advertising, which could ultimately weigh on Facebook stock after earnings if the company fails to live up to its competitors, notes Bank of America.

Crucial quote

“Expectations for earnings growth are the highest in years, which leaves more room for disappointment,” said Brian Overby, a senior options analyst at Ally Invest, in an email on Tuesday, predicting that Facebook shares would rise by as much after that the earnings report could move up to 6%. “In addition, investors will be watching Big Tech particularly closely because the sector has benefited so much from strong consumer spending and the shift towards a more technology-oriented society.”

Key background

Founded in 2004 by a group of Harvard College classmates including billionaires Mark Zuckerberg and Dustin Moskovitz, Facebook is now the fifth largest US company by market cap, valued at nearly $ 1.1 trillion. More than 95% of sales come from advertising, and about 50% of sales are in the US and Canada. Although Bank of America expects the stock could rise another 20% over the next three years, its analysts warn that the biggest risks to watch out for are declines in user activity, privacy issues, big tech regulation, and negatives Effects on advertising prices include.

Big number

$ 386.50. That’s how high analysts believe that, according to Bloomberg data, Facebook shares can rise next year, giving the share a plus of about 4% compared to the current price of about $ 370.

further reading

Why Facebook Now Plans To Pay $ 1 Billion To Influencers By 2022 (Forbes)

Facebook Second Quarter Earnings: Can FB Keep Ad Revenue Growth Despite Competition And Pressure From Apple? (Forbes)

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