Great expectations for Facebook earnings

Can Facebook follow last quarter’s blockbuster earnings report with a strong showing when it reports results this afternoon?

Expectations are high: Analysts surveyed by FactSet estimate profit of 40 cents a share on $3.12 billion in revenue. That compares with profit of 25 cents a share on $2.02 billion in sales in the year-ago quarter.

After the company in July reported second-quarter sales that rose 61 percent and profit that more than doubled year over year, Facebook CEO Mark Zuckerberg said during the earnings call that the company’s recent moves — such as spending billions of dollars on WhatsApp and Oculus VR — would not pay off right away.

But Mark Mahaney, an analyst at RBC Capital Markets, said on CNBC’s “Squawk on the Street” Monday that initiatives such as autoplay video ads and “Instagram monetization” are among the causes for optimism in the near term. (Another but: As the Mercury News reported, COO Sheryl Sandberg also sounded a cautious note about Instagram during last quarter’s earnings call, saying the company would proceed “slowly and carefully” with ads on Instagram.)

Other analysts are also optimistic about ads in general, including mobile-ad sales, which in the second quarter accounted for the majority of Facebook’s ad sales.

Cantor Fitzgerald analyst Youssef Squali praised the company’s “position as the largest, most engaged mass-reach Internet platform for advertisers, unmatched targeting potential, and very potent monetization formats.”

Finally, yet another reason for the great expectations: Facebook has beat Wall Street estimates nine quarters in a row.

Facebook shares are down slightly, about 0.25 percent, today. They’ve risen about 40 percent over the past six months.


Photo from Reuters archives


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