Excuse us if you’ve heard this song before: Facebook Inc. – besieged by the president and his predecessor, the Federal Trade Commission, bestselling book and lawmakers – is expected to rack up record revenue and bottom line when it releases profits.
So at least investors are happy as the social media juggernaut moves forward relentlessly, with billions of dollars in advertising, a market value exceeding $ 1,000 billion and 3.3 billion users and cash ahead of the report. of the second quarter of Wednesday. Analysts also still like Facebook FB,
with Cowen analyst John Blackledge, who recently raised his second-quarter ad revenue forecast to $ 28.8 billion, reflecting “what’s-me-worried?” A Teflon chandelier covers the company and its managing director, Mark Zuckerberg.
The general mood in digital advertising is that, aside from considerable political and regulatory issues, Facebook and Google’s parent company, Alphabet Inc. GOOGL,
“Remain dominant today and are regularly preferred platforms for advertisers,” a Wedbush Securities note observed on July 19. The mood is probably even brighter after the spectacular earnings results of Twitter Inc. TWTR,
and Snap Inc. SNAP,
Thursday highlighted what financial analysts have been saying for weeks: An increase in digital advertising will greatly benefit Facebook and Alphabet.
Don’t Miss: Learn About Twitter and Snap Earnings
“We’ve written a lot about the strength of the online advertising markets over the past 9 months… but even we underestimated 2Q / 3Q results,” Morgan Stanley analyst Brian Nowak said of Twitter and Snap in a Friday note. “These trends and results are positive readings for Google / Facebook / Pinterest PINS,
/ Amazon AMZN,
announcements in the next week.
The booming results, ironically, have also caught the attention of lawmakers trying to curb the ever-growing economic clout and market power of Big Techs. On July 16, President Joe Biden specifically called out Facebook and other social media sites for their role in spreading misinformation about the COVID-19 vaccine before reverting to his comments days later. Facebook hit back with a bloated blog post on Saturday. “At a time when COVID-19 cases are on the rise in America, the Biden administration has chosen to blame a handful of American social media companies,” wrote Guy Rosen, Facebook’s vice president of integrity.
Not to be outdone, former President Donald Trump is suing Facebook, Twitter and Google for having “canceled” it after the January 6 insurgency. Then there’s the damning account of the new book “The Ugly Truth: Inside Facebook’s Battle for Domination,” which chronicles the dysfunction of Facebook’s executive decision-makers and the penchant for blame deflection – not to mention the ongoing investigation. the FTC and a series of antitrust. bills that, among other goals, attempt to reverse Facebook’s acquisitions of Instagram and WhatsApp.
Read also: Faced with antitrust competition, Google’s stock still hits record levels as ad sales sizzle
In response, Zuckerberg seems to be thinking about presenting his business in a new way. In an interview with The Verge this week, Zuckerberg laid out an ambitious plan to turn the social media giant into a so-called metaverse company “where instead of just watching content – you are there,” he said. . “But the metaverse isn’t just virtual reality. It will be accessible on all of our different computing platforms – VR and AR, but also PC, as well as mobile devices and game consoles. “
Expect to hear more about the “metaverse” plans when Zuckerberg and other Facebook executives hold a conference call Wednesday night, as well as questions about all the forces lining up against Facebook. Don’t expect all of this to have an effect on the money that continues to flow into the social media giant.
What to expect
Earnings: Analysts on average expect Facebook to report earnings of $ 3.04 per share, down from $ 1.71 per share a year ago. Analysts had expected $ 2.49 per share at the end of March.
Contributors to Estimize – a crowdsourcing platform that brings together estimates from Wall Street analysts as well as buy-side analysts, fund managers, business executives, academics and others – are planning to earnings of $ 3.04 per share on average.
Income: Analysts on average expect Facebook to bring in $ 27.85 billion in revenue in the second quarter. Estimate contributors predict $ 27.84 billion on average.
Movement of stock: Facebook shares fell after four of the last eight quarterly earnings reports, gaining 7.3% after first quarter earnings. Facebook stock has risen 28% so far this year, while the S&P 500 SPX index has climbed 16%.
What analysts say
A herd of Facebook analysts, led by the aforementioned Wedbush Securities, expects (record) as usual despite the anti-Facebook climate and changes to Apple Inc.’s AAPL,
iOS 14.5 which inhibits the ability of Facebook and other companies to track users and show them certain advertisements.
“Google search, Facebook, Google Shopping and Instagram were ranked most often among the [return on advertising spend] platforms, ”Wedbush Securities analysts concluded from a survey of advertisers on the ROI impact of Apple’s privacy efforts.
“Overall, our channel checks imply a strong and possibly noisy 2T for Facebook,” said Rohit Kulkarni, analyst at MKM Partners, in a July 12 note to clients that rates Facebook shares as bought with a target price of $ 380. “However, we believe the 2H21 innovation pipeline for major FB / IG products appears to be picking up steam, with the redesign of the Instagram app (with TikTok-style vertical videos, front and center reels ), more in-game content, smart ad recommendations and growth focus on the creator economy.