Don’t necessarily assume that
will publish less than excellent results on Wednesday due to everything currently circulating around the company — from antitrust allegations and misinformation leveled by Washington to the implications of
new ad tracking limits.
Wall Street certainly doesn’t think that’s the case, at least not for the second quarter.
Facebook (ticker: FB) is expected to report earnings of $8.8 billion or $3.52 per share – a growth of about 70%. And the consensus estimate for revenue is up nearly 50%, to $27.9 billion. Even Facebook’s monthly active user base is expected to grow by 7.3% to 2.9 billion.
It’s not that the threats don’t matter — they will at some point — but they just don’t matter right now. Even a very real here and now, Apple’s app tracking transparency initiative that went into effect in April and would force users to sign up for Facebook tracking outside of that app doesn’t seem to have caused as much revenue damage as it did. it could have.
The Street’s strong estimates, strong results from rivals on social media
(TWTR) last week, and last year’s weak quarter for digital advertisers due to spending cuts from Covid-19, are all fueling investor expectations. Analysts say they are looking for substantial beat and bullish guidance for the third quarter.
For Evercore ISI analyst Mark Mahaney, Apple’s tracking shift isn’t the story. He’s going to take a close look at Facebook’s monthly user base and how it compares to last year’s mid-lockdown when people didn’t have much else to do. Mahaney expects user growth to slow.
BofA Securities analyst Justin Post agrees with Apple. Early data his team reviewed suggests the new policy won’t have much of an impact in the second quarter. Post thinks investors should pay attention to comments about the impact of the tracking changes in the second half of the year; his team predicts the new policy could cut third-quarter revenue by half a figure.
Ads aside, it never hurts to pay some attention to Facebook’s virtual reality efforts. Chief Executive Mark Zuckerberg has emphasized how important the company’s VR and augmented reality business could become, and has staked billions on that claim. Second quarter sales, including the Quest 2 VR gadget, are expected to be $690.5 million.
Of the 58 analysts who follow Facebook, 48 stocks give a buy recommendation. Seven rate the Hold stock and three have a Sell rating. The average target price is $392.91, which is a 7.3% increase. The stock closed Tuesday’s regular session at $367.81.
Shares are up 34% this year; the
S&P 500 Index
has progressed 18%.
Write to Max A. Cherney at email@example.com